Agenda - kent-pcc.gov.uk · 13 Complaint Trends 1610 – 1630hrs 267 14 CIPFA SOLACE Framework Progress Update Laura Steward & Mark ... CSR for 2017 onwards would be reopened, but

Office of the Kent Police & Crime Commissioner, Kent Police Headquarters, Sutton Road, Maidstone, Kent ME15 9BZ

Office telephone: 01622 677055. Press contact: 01622 604343. Email: [email protected] Website: www.kent-pcc.gov.uk Twitter: @PCCKent

Agenda Meeting: Joint Kent Police and Crime Commissioner and Chief Constable Audit Committee

Time and date: Monday 26th September 2016 at 1330hrs

Venue: HQ County Room

Attendees: Committee Members – Mr A West (Chair), Mr M Grubb, Mr M Lacaille, Ms J Cosgrove and Ms J Eden

Office of Kent Police and Crime Commissioner (OKPCC ) – Mr A Harper (Chief of Staff), Ms L Steward (Head of Standards and Regulation)

Kent Police – Mr M Gilmartin (Director of (K&E) Support Services, Mr P Curtis (Chief Finance Officer), Ian Drysdale (Director of Corporate Services), Carol Norfolk (Deputy Head of Crime & Incident Response)

Other – External Auditor (Ernst & Young) – Ms D Hanson – Internal Auditor (RSM) – Mr D Harris and Ms A O-Keeffe.

Item Action Owner Approx running time Page

1 Apologies Mr West

1330 - 1340hrs

-

2 Declarations of Interest Mr West -

3 Notes of Previous Meeting Mr West 1

4 Matters Arising Mr West 9

5 Force Update ACC Blaker 1340 – 1400hrs -

6 External Audit Update Ernst & Young

1400 – 1420hrs 13

7 Internal Audit Update RSM 1420 – 1440hrs 61

8 Audit Recommendations Tracker Mark Gilmartin

1440 – 1445hrs 85

9 OPCC Risk Register Laura Steward

1445 – 1500hrs 91

10 In Year Financial Monitoring Paul Curtis 1500 – 1515hrs 105

11 Final Accounts and Annual Governance Statement

Paul Curtis

1515 – 1600hrs 111

12 Year End Process 2016/17 Paul Curtis 1600 – 1610hrs 265



13 Complaint Trends 1610 – 1630hrs 267

14 CIPFA SOLACE Framework Progress Update

Laura Steward &

Mark Gilmartin

1630 – 1645hrs 271

Motion to exclude press and public for Exempt item That under Section 100A of the Local Government Act 1972 the public be excluded from the meeting for the following business on the grounds that it involves the likely disclosure of

exempt information as defined in paragraphs 3 of Part 1 of Schedule 12A of the Act and the public interest not to disclose the information outweighs the public interest in disclosing it.

15 FCR Deep Dive Mark Gilmartin

1645 – 1710hrs 275

16 Force Risk Register Ian Drysdale

1710 – 1725hrs 293

17 HMIC Inspections Ian Drysdale

1725 – 1735hrs 305

18 Work Planner Laura Steward

1735 – 1740hrs 307

19 AOB 1740 – 1745hrs -



Minutes Title: Joint Kent Police and Crime Commissioner and Chief Constable Audit Committee

Date & time: Friday 1st July, 2016 - 09:00hrs

Venue: Clift Room, Kent Police Headquarters, Sutton Road, Maidstone, ME15 9BZ

Attendees: Committee Members: Ashley West (Chair), Mike Lacaille, Jane Cosgrove and Judith Eden

Office of the Kent Police and Crime Commissioner (OPCC): Sean Nolan (Chief Finance Officer), Laura Steward (Head of Standards and Regulations) and Alexandra Leckie (EA to PCC – Minute taker)

Kent Police: Mark Gilmartin (Director of Kent & Essex Support Services), Supt Simon Wilson (Head of Continuous Improvement), Paul Curtis (Chief Finance Officer), Louisa Neiles (Governance Manager), Sonia Virdee (Financial Controller), Mark Johnson (Head of Analysis)

External Auditor (Ernst & Young): Debbie Hanson

Internal Auditor (RSM): Dan Harris

The Committee were welcomed by the Chair. 1. Apologies

Apologies were received by Malcolm Grubb, Ian Drysdale and ACC Jo Shiner. 2. Declaration of Interest

There were no declarations of interest reported. 3. Notes of previous meeting (Tuesday 15th March, 2016)

The notes of the previous meeting were agreed to be an accurate representation of the meeting, with amendments made to items 5, 16, 13 and 8 and agreed by SN and the Chair at the meeting. 4. Matters Arising

The Chair discussed the Matters Arising Report with the Committee and updates provided and subsequently recorded on the Matters Arising Log. 5. Force Update

MG provided a verbal Force update on behalf of ACC Shiner updating the Committee on staff changes, organisation demands and current operations which included a presentation by MJ on the anticipated implications of Brexit.

MG confirmed that the CC would be delighted to attend a future Audit Committee meeting.



Questions/comments:

�� Action: MG to arrange for update on the FCR issues as part of the Risk Register and for this to be covered as a ‘deep dive’ item at the next meeting (requested by AW).

Mark Johnson provided an update on the implications the Force are facing as a result of Brexit (a hard copy slide was provided).

Questions/comments:

• JE was keen to learn how the police will lobby with politicians on Brexit negotiations. MJ confirmed that this concern has been raised in the Brexit Operation Report and at Chiefs’ Council.

• SN believes little risk of in-year budget changes, but growing probably given that the medium term CSR for 2017 onwards would be reopened, but too early to predict what if any impact for policing. In short, he advised an amber alert on medium term finance, but no need or evidence to suggest any change to force saving’s plan at this stage.

• LS attended the Force’s most recent Multi-Agency Hate Crime Forum and it was clear from each leader that they are acutely aware of these issues and are working in collaboration with partners.

• LN confirmed that it is likely that Brexit will appear in the Force’s Risk Register, however its presentation is unknown at this stage.

� Action: LN to update the Committee at the next meeting in September on Brexit and the Risk Register once more facts are known.

6. Annual Review Summary

LS provided a verbal update to the Committee, with the supporting paper.

• Positive responses have been received on the report. • Aim to start recruitment process for new members by Autumn 2016 Questions/Comments:

�� Action: LS to amend the word ‘technology’ to ‘strategic programme management’ in point 9 of the Annual Review (page 12) as suggested by SN in Malcolm Grubb’s absence.

�� Action: LS to review and amend the presentation of the Draft Annual Report (page 13) as suggested by JC.

�� Action: In relation to ‘item 6’ LS has taken an action to write formally to members on terms of office.

• The Committee have approved the Draft Annual Report created by ML subject to the presentation being tidied up and it will be published on the PCC website.

• It was agreed that Committee members will feed back any comments from Force meetings the Committee have attended to MG and then anything else that is of interest will be brought to these meetings either in the agenda or under AoB.

7. Draft Final Accounts and Draft Annual Governance Statement

SN provided an overview of the Annual Governance Statement in the context of the draft Final Accounts. PC provided a summary of the significant points of the Draft Final Accounts with the supporting paper. Questions/comments:

• A discussion took place regarding pension liability change and its impact on the final accounts.



• JE mentioned that the use of brackets on pages 42/43 perhaps require revision as their use is ambiguous.

• ML congratulated the team on producing the Final Accounts within the deadline.

�� Action: SN/PC to include a note of the £10m that has been released relating to previous pension miscoding. Also a note on Milne v GAD may be required.

• ML stated that in the commentary on the Balance Sheet (page 27) there is a significant difference from the previous year. SN stated that the difference is due to FRS 17 and change in the discount factor SN ensured that this number was reviewed by the actuaries and it is correct.

• The Committee gave their approval of the Final Accounts. SN provided a summary of the significant points of the Draft Annual Government Statement with the supporting paper. • New PCC update:

o The new PCC has inherited this Statement. o The PCC is scheduled to attend the next Audit Committee in September. o The PCC intends to publish an interim Police & Crime Plan and a prospectus for his

Commissioning intentions for 2017 onwards (by the autumn). • It is likely that Brexit will be added to the Statement (as it will become a new strategic risk); however

Brexit will not be added to the Accounts. Questions/comments:

�� Action: DH/SN to review the Annual Governance Statement to determine whether it covers the financial year or year to date, and the subsequent role of the new PCC and their involvement in the Statement.

• Subject to concluding SN/JC’s discussion, the Committee were content to approve the Annual Government Statement.

• SN/SL discussed the use of the wording ‘The Audit Committee is advocating a sector led approach’ in point 19d (page 21), however no change was concluded.

• JC stated that perhaps the use of the word ‘occasionally’ in point 18 (last bullet - page 20) is not quite the right term as it is more frequent than that. SN noted this point.

MG provided an update to the Committee on Athena during this item and outlined the actions being taken in order to address the technical and commercial issues. �� Action: MG to provide an Athena update at the next Audit Committee on 26th September. The Chair would like it noted that the Committee have now reviewed the Draft Final Accounts and Draft Annual Governance Statement. 8. External Audit Plan and Update

D Hanson (EY) provided an update to the Committee, with the supporting papers. • Aiming to conclude work by the end of July - slightly behind on the plan and may require additional

resource.



• Value for money conclusion – information has been shared with EY on the HMIC PEEL Inspections and EY are comfortable that there were no issues after reviewing this information.

• EY have been assured regarding Athena processes. • PC confirmed that he is happy in terms of the timetable and the process. • DH invited the Committee to consider the questions on page 187 of the pack. Further to the mention

of PCCs taking on responsibility for the fire service within the questions, SN confirmed that the PCC does not wish to take on the governance of KFRS or have a single employer model at this stage.

Questions/comments:

• PC confirmed that the auditors will be able to capitalise on the efficiencies that his team has made in terms of process.

• AW stated that if there are any points of concern that E&Y come across they should report these to AW if usual channels are not working. DH confirmed that there is currently nothing causing concern.

�� Action: OPCC Secretariat to set up a 30 minute meeting with E&Y / RSM / AW and the other Committee members ,prior to the next Audit Committee in September for an annual catch up.

• ML confirmed that he felt the report was balanced and reassuring. 9. External Audit Procurement

SN provided an update to the Committee, with the supporting papers. • The Committee endorsed the ‘sector led approach’ for the procurement of an external auditor

suggested by SN. ML would like the risks set out for the PCC. SN confirmed that this will form part of the report approved by the PCC.

• JE asked if Essex will go a different way to Kent and if it will cause concern for Kent. MG is not aware at this stage what they will decide upon, however it is likely they will go with the same ‘sector led approach’.

10. Internal Audit Update and Annual Internal Audit Report

D Harris (RSM) provided an overview of the Annual Internal Audit Report 2015/16 with the supporting paper. Questions/comments:

• AW queried if Section 2.2 (page 205 – Implementation of internal audit management actions) refers to the 14/15 period and D Harris confirmed that it does.

• D Harris will issue a final Annual Internal Audit Report - there will not be any major content changes. • The Committee confirmed they were satisfied with this report. D Harris (RSM) provided an overview of the Internal Audit Progress Report with the supporting paper. Questions/comments:

• The Committee confirmed they were happy with the changes outlined in the Internal Audit Progress Report and provided their approval.

• The proposed Internal Governance Audit will be delayed until December – the Committee is happy for this to be delayed in order to incorporate new AGS requirements.



11. Audit Recommendations Tracker

MG provided an update to the Committee, with the supporting paper.

�� Action: D Harris has noted that five recommendations within the Tracker have not passed the threshold (the ‘closed test’) - MG to investigate and report back to the Committee.

• The ANPR Contract Management is a high outstanding recommendation – MG confirmed that this will be resolved by David Edwards by 19th July.

• ML noted that the IT Disaster Recovery Plan was due to be completed on 30th June however is still outstanding and MG confirmed this has been completed (Committee papers were sent before the due date).

• MG stated that the FCR should have some technical resource within the department, but this would not constitute a separate IT department.

12. New CIPFA/SOLACE Framework

SN provided an update to the Committee, with the supporting papers. • There is a new updated version of the CIPFA/SOLACE framework due and it will be a more

customised approach for policing. SN’s recommendation is that this framework change must occur and provides a good opportunity for the Committee to engage with the Force/OPCC well before April 2017.

• ML was interested to know what the key difference between the 16/17 and current framework. SN explained that it is down to ‘emphasis’ on culture.

• JC is keen for the framework for Kent to be outcome focussed rather than aspirational.

�� Action: MG/LS to produce a structured plan to work through the principles of the new CIPFA/SOLACE framework and ensure it is outcome focussed (i.e. evidence based); both to report back with the work in progress at the next Audit Committee in September.

13. OPCC Risk Register

LS provided an update to the Committee, with the supporting papers. �� Action: LS to make the use of arrows and colours clearer on Appendix 1 ‘OPCC Strategic Risk

Register – March 2016’.

• The PCC, Chief of Staff and LS are due to meet to discuss the Complaint Management Model. • Brexit will be added to the Risk Register and will reflect a financial and operational dimension. • Now that the new PCC is embedded within the OPCC the Risk Register will be comprehensively

reviewed. �� Action: LS will update the Audit Committee on the comprehensive review of the Risk Register with

the new PCC. Questions/comments:

• An update on the OPCC CFO recruitment was provided by LS/SN. Key points: o Interviews are taking place on 11th July. o Vetting and notice periods will slow the recruitment process down.



o Intention to hold a confirmation hearing for the new CFO at the September Police & Crime Panel.

o SN will liaise with MG/CC to confirm what interim support the Force could provide. o SN’s last effective working day is 5th August; however SN has agreed to provide some

occasional support after this. o If the interviews are not successful, an interim will need to be appointed.

�� Action: LS to provide an update to the Audit Committee after the CFO interviews taking place on 11th July and outline the critical areas of the CFO’s responsibilities and how they will be covered in the interim (cover the risks).

14. Whistleblowing and Related Policies

LS provided an update to the Committee, with the supporting papers. Questions/comments:

• JC enquired whether the policy gets used. The Committee were assured that the whistleblowing policies are used and are effective (examples provided by MG and LS).

• MG stated that the Force inform employees about the whistleblowing policy (protected disclosure, wrongdoing) via the intranet.

15. Force Risk Register **RESTRICTED ITEM**

Due to this being a restricted item, the Chair advised to note that the Audit Committee received a review of the Force Risk Register and were updated on the risks that have changed. �� Action: LN to bring the presentation on ‘101’ and FCR demand management to the next Audit

Committee in September. 16. HMIC Inspections **RESTRICTED ITEM**

The Committee discussed HMIC Inspections. �� Action: Future reports will outline any significant outstanding recommendations and likely HMIC

activity over the coming quarter. 17. Work Planner

LS provided an update to the Committee, with the supporting papers. �� Action: LS to amend item 13 of the Planner, ‘Final Accounts and Annual Governance Statement’ to

include ‘Audit Results Report’.

18. AOB • A hand-out on the Corporate Meeting Attendance Schedule 2016 was supplied by LS to the Audit

Committee.

�� Action: LS to circulate Corporate Meeting Attendance Schedule 2016 hand-out by email to Committee and to seek members’ availability for newly included Force Performance Meetings.

• The Chair noted that this is SN’s last Audit Committee meeting and thanked him for his hard work and direction and wished him well for the future. SN also thanked the Chair and the Members for all their work and believes the Audit Committee have been very effective.



The next meeting will take place on Monday 26th September, 2016 at 13:30hrs in the County Room, Kent Police FHQ.



Audit Committee Matters Arising Report Maters Arising from Monday 26th September 2016

Ref. Item Page Action Status Date Complete

Owner Notes

33/16 3 1 Jade to remove the line “The Committee gave their approval of the Final Accounts” from item 7, page 3 of previous minutes.

Complete 08.11.16 JS

34/16 3 1 Jade to change names/initials on minutes to another format due to the number of “MG’s in attendance.

Complete 08.11.16 JS

35/16 5 2 Mark Gilmartin to provide an update on 2016/17 plans for recruitment (including PCSOs and PCs) to the Committee at the next meeting.

Ongoing MG

36/16 5 2 Force to present deep dive on partnerships at a future committee meeting.

Ongoing TBC This has been pushed back to the March meeting

37/16 7 3 Mark Gilmartin to provide a copy of the Information Commissioner’s report to the Committee when it is available.

Ongoing Mark G

38/16 7 3 Committee to have a preliminary discussion on the internal audit programme for next year at the next audit committee in December.

Ongoing Committee To be raised under AOB at the end of the next meeting in December

39/16 9 4 The Commissioner’s Office to provide a deep dive into the risks associated with partnerships and commissioning services at the next Audit Committee.

Ongoing TBC This has been pushed back to the March meeting

40/16 9 4 Laura to redesign the ‘snapshot’ of the risk register to ensure that “Direction of Risk Travel” and “Status” is clearly reported.

Ongoing LS



41/16 12 4 Paul to provide a draft audit timetable at the next committee meeting in December.

Ongoing PC

42/16 12 4 Paul to provide the programme for the year end and produce a paper setting out initiatives to be taken in 2017.

Ongoing PC

43/16 13 5 Internal, external, resolved and unresolved complaints figures to be provided to the Committee in December, alongside the correct percentages from the report.

Ongoing TBC Member of staff from the force (possibly Ian Drysdale) to present this to committee

44/16 14 5 Laura and Mark to bring the draft version of the framework to the committee in December.

Ongoing LS & Mark G

45/16 17 6 The committee would like a table included within future papers detailing the outstanding recommendations.

Ongoing Melinda G

Office of the Police & Crime Commissioner for Kent and Chief Constable for Kent

Audit Results Report - ISA (UK and Ireland) 260 for the year ended 31 March 2016

11 August 2016

Contents

Deliberately left blank for printing purposes

Contents

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Contents

1. Executive summary......................................................................................................... 0

2. Responsibilities and purpose of our work ................................................................... 3

3. Financial statements audit ............................................................................................. 4

4. Value for money ............................................................................................................. 10

Appendix A – Corrected audit differences ......................................................................... 13

Appendix B – Outstanding matters ..................................................................................... 15

Appendix C – Independence ................................................................................................ 16

Appendix D – Auditor fees ................................................................................................... 17

Appendix E – Draft audit report – Group/PCC ................................................................... 18

Appendix F – Draft audit report – CC .................................................................................. 21

Appendix G – Management representation letter – Group/PCC ...................................... 24

Appendix H – Management representation letter – CC ..................................................... 29

Appendix I – Required communications with the audit committee ................................. 34

In April 2015 Public Sector Audit Appointments Ltd (PSAA) issued ‘‘Statement of responsibilities of auditors and audited bodies 2015-16’. It is available from the Chief Executive of each audited body and via the PSAA website (www.psaa.co.uk)

The Statement of responsibilities serves as the formal terms of engagement between appointed auditors and audited bodies. It summarises where the different responsibilities of auditors and audited bodies begin and end, and what is to be expected of the audited body in certain areas.

The ‘Terms of Appointment from 1 April 2015’ issued by PSAA sets out additional requirements that auditors must comply with, over and above those set out in the National Audit Office Code of Audit Practice (the Code) and statute, and covers matters of practice and procedure which are of a recurring nature.

This Audit Results Report is prepared in the context of the Statement of responsibilities. This report is intended solely for the use of the Members of the audited body. We, as appointed auditor, take no responsibility to any third party.

Our Complaints Procedure – If at any time you would like to discuss with us how our service to you could be improved, or if you are dissatisfied with the service you are receiving, you may take the issue up with your usual partner or director contact. If you prefer an alternative route, please contact Steve Varley, our Managing Partner, 1 More London Place, London SE1 2AF. We undertake to look into any complaint carefully and promptly and to do all we can to explain the position to you. Should you remain dissatisfied with any aspect of our service, you may of course take matters up with our professional institute. We can provide further information on how you may contact our professional institute.

http://www.audit-commission.gov.uk/pages/default.aspx

Executive summary

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1. Executive summary

The National Audit Office’s Code of Audit Practice (the Code) requires us to report to those charged with governance – the Police and Crime Commissioner and the Chief Constable – on the work we have carried out to discharge our statutory audit responsibilities together with any governance issues identified. This report summarises the findings from the 2015/16 audit which is substantially complete. It includes messages arising from our audit of your financial statements (which comprise those for the Police and Crime Commissioner Group and those for the Chief Constable) and the results of the work we have undertaken to assess your arrangements to secure economy, efficiency and effectiveness in your use of resources. Below are the results and conclusions on the significant areas of the audit process.

Status of the audit

We have substantially completed our audit of the financial statements of Kent Police for the year ended 2015/16. Subject to satisfactory completion of the following outstanding items, we will issue our audit opinions in the form which appears in Appendix E and Appendix F:

Finalisation of Director review of audit work performed (Group/PCC and CC).

Final director review of the amended financial statements (Group/PCC and CC).

Receipt of the signed management representation letter and the signed financial statements (Group/PCC and CC).

We have performed the procedures outlined in our Audit Plan and anticipate issuing an unqualified opinion on the financial statements. We expect to conclude that both the PCC and CC have put in place proper arrangements to secure value for money in your use of resources. The Office of the PCC are updating the whole of government accounts return to reflect the changes that have been made to the statutory accounts. Once this has been done, we will perform the procedures required by the National Audit Office (NAO) regarding the Whole of Government Accounts submission. The audit certificate is issued to demonstrate that the full requirements of the NAO Code of Audit Practice (the Code) have been discharged for the relevant audit year. As our audit of the Whole of Government Accounts has not been completed, we will not be able to issue the audit certificate for the PCC/Group at the same time as the audit opinion, but anticipate issuing by the deadline of 21 October. We anticipate issuing the certificate for the CC at the same time we issue the opinion on the CC accounts.

Audit differences

There is one unadjusted audit difference which impacts on both the CC and PCC/Group accounts. This relates to claims for overtime from the undercover officers which have been received for Kent Police. The Force estimates that the potential liability for these claims is in the region of £480,000. Given the fact that this potential liability was not clarified until August 2016 the accounts have not been amended to provide for this sum, which is not material in the context of our audit.

Our audit identified two material audit differences and a number of

Executive summary

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further disclosure differences which our team have highlighted to management for amendment. These have been corrected during the course of our work and further details are provided at Appendix A. These adjustments have not had an impact on useable reserves.

Scope and materiality

In our audit plan presented at the 15 March 2016 Joint Audit Committee meeting, we communicated that our audit procedures would be performed using materiality of:

between £5.3 million and £10.6 million for the Group financial statements, based on either 1% or 2% of gross revenue expenditure;

£5.7 million for the PCC financial statements based on 2% of gross assets; and

between £4.1 million and £8.3 million for the CC financial statements, based on either 1% or 2% of gross revenue expenditure.

We have reassessed these levels based on the actual results for the financial year and there has been a change to the materiality levels we have applied. Our audit procedures have therefore been performed using materiality of:

£9.1 million for the Group financial statements, based on 2% of gross revenue expenditure;

£6.2 million for the PCC financial statements based on 2% of gross assets; and

£7.8 million for the CC financial statements, based on 2% of gross revenue expenditure.

The reason for the change in materiality from the original assessment at planning is because this was based on the 2014-15 financial statements, as the most current financial information available at the time.

The threshold for reporting audit differences which impact the financial statements have also changed:

from £0.532 million to £0.456 million for the Group financial statements;

from £0.284 million to £0.311 million for the PCC financial statements; and

from £0.414 million to £0.392 million for the CC financial statements.

We also identified the following areas where misstatement at a level lower than our overall materiality level might influence the reader. For these areas we developed an audit strategy specific to these areas, the areas identified and audit strategy applied include:

Remuneration disclosures including any severance payments, exit packages and termination benefits. Strategy applied was that we:

o checked the bandings reported in the disclosure notes;

o tested the completeness of the disclosures;

o verified compliance with the Code; and

o sample checked transactions to the payroll system and supporting documentation.

Related party transactions. Strategy applied was that we:

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o verified the disclosures were compliant with the Code; and

o sample checked contracts from the contract register to Companies House information to identify whether any key decision-makers had an interest in the company.

We carried out our work in accordance with our Audit Plan.

Significant audit risks

We identified the following significant audit risks during the planning phase of our audit, and reported these to you in our audit plan:

Accounting for the outcome of the Milne v Government Actuaries Department legal case (GAD) (Group, PCC, CC)

Procedures for the production of the accounts (Group, PCC, CC) Risk of management override (Group, PCC, CC)

Risk of fraud in revenue recognition (Group, PCC, CC)

The ‘addressing audit risks’ section of this report sets out how we have gained audit assurance over those issues.

Other reporting issues

We have no other matters we wish to report.

Control observations

We tested controls relating to payroll and pension. We have not identified any significant deficiencies in the design or operation of an internal control that might result in a material misstatement in your financial statements of which you are not aware.

However, during our sample testing of journals, we found that the system allows journals to be posted without a description.

Furthermore, our sample testing of contracts found that the contract register had not been kept up-to-date and in some instances the original signed contract could not be provided.

We would like to take this opportunity to thank the Office of the Police and Crime Commissioner’s staff and the staff of the Chief Constable for their assistance during the course of our work.

Debbie Hanson

Executive Director For and on behalf of Ernst & Young LLP

Responsibilities and purpose of our work

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2. Responsibilities and purpose of our work

The Responsibilities of the Police and Crime Commissioner (PCC) and the Chief Constable (CC)

The PCC and CC are responsible for preparing and publishing their Statement of Accounts, accompanied by the Joint Annual Governance Statement (AGS). In the joint AGS, the PCC and CC report publicly on the extent to which they comply with their own code of governance, including how they have monitored and evaluated the effectiveness of their governance arrangements in the year, and on any planned changes in the coming period.

The PCC and CC are also responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources.

Purpose of our work

Our audit was designed to:

Express an opinion on the 2015/16 financial statements of the PCC Group, the PCC and the CC together with the consistency of other information published with them;

Report on an exception basis on the Joint Annual Governance Statement;

Consider and report any matters that prevent us being satisfied that the PCC and CC had put in place proper arrangements for securing economy, efficiency and effectiveness in their use of resources (the value for money conclusion); and

Discharge our statutory duties and responsibilities as established by the Local Audit and Accountability Act 2014 and Code of Audit Practice.

In addition, this report contains our findings related to the areas of audit emphasis and any views on significant deficiencies in internal control or the PCC and CC accounting policies and key judgments.

Alongside our work on the financial statements, we also review and report to the National Audit Office on your Whole of Government Accounts return. The extent of our review and the nature of our report are specified by the National Audit Office.

Financial statements audit

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3. Financial statements audit

Addressing audit risks

We identified the following audit risks during the planning phase of our audit, and reported these to you in our Audit Plan. Here, we set out how we have gained audit assurance over those issues.

A significant audit risk in the context of the audit of the financial statements is an inherent risk with both a higher likelihood of occurrence and a higher magnitude of effect should it occur and which requires special audit consideration. For significant risks, we obtain an understanding of the entity’s controls relevant to each risk and assess the design and implementation of the relevant controls.

Significant Risks (including fraud risks)

Audit procedures performed Assurance gained and issues arising

Milne v Government Actuaries Department (GAD) (Group, PCC, CC)

Following the determination of the case of Milne v GAD in May 2015 by the Pensions Ombudsman, Kent Police is required to make payments to those individuals affected by the judgement. This case centred on whether GAD had a proactive responsibility to review the commutation factors used in the calculation of the lump sum payments made to pensioners when they opt to take an increased amount of their pension benefit in that form. The total value of payments which are due to be paid before 31 March 2016 is expected to be material. The payments are expected to be funded by the Department of Communities and Local Government through the top up grant. Therefore there will be no overall impact on the financial position of the PCC or CC. The accounting arrangements for these payments have not yet however been determined.

We obtained a list of the payment transactions made in the year and tested a random sample.

We agreed the figures in the transaction list to the calculations in the calculator populated by the Kent County Council Pensions team.

We obtained the reconciliation to confirm that the transaction listing prepared by the pension fund administrators was complete.

We reviewed the accounting treatment and associated disclosures within the Group/PCC and CC financial statements and the Police Pension Fund Account.

We tested the year-end balance substantively and did not find any errors. Our sample testing provides us with the necessary assurance that the year-end figure is not materially misstated.

Our review of the management controls and reconciliation confirmed the completeness of the data and the information held by the pension fund administrators on the payments made was found to be materially accurate.

However, our review of the accounting treatment and associated disclosures found that the transactions had not been disclosed in the Police Pension Fund Account.

Therefore, an amendment has been made to the Police Pension fund account to disclosure the amount of £9.006 million for the payments made to individuals and an equal amount disclosed for the funding received through the top up grant.

Procedures for the production of the accounts (Group, PCC, CC)

A number of issues and errors were found in the draft financial statements of both the PCC and the CC in 2014-15 and 2013-14. In particular, amendments were required to the primary statements, including the Movement in Reserves Statements, in respect of the incorrect accounting treatment of IAS19 transactions. Disclosure amendments were also required to notes supporting the accounts.

While the accounts were corrected and unqualified opinions issued on both the PCC and CC accounts, there remains a potential risk of material misstatement occurring in 2015-16.

We provided a checklist of working paper requirements to feed into the closedown plan and project management for producing the financial statements.

We reviewed the closedown plan to ensure it was reasonable and realistic.

We undertook early review of working papers which supported the financial statements and provided feedback to clarify the interpretation and expectations.

We are pleased to report that the process for the preparation and production of the financial statements continues to improve and this has been demonstrated through the few matters we have communicated in our report this year.

We have not identified any material areas of non-compliance with CIPFA’s Code in our audit of the financial statements of either the PCC or the CC.


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Risk of management override (Group, PCC, CC)

As identified in ISA (UK and Ireland) 240, management is in a unique position to perpetrate fraud because of its ability to manipulate accounting records directly or indirectly and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively. We identify and respond to this fraud risk on every audit engagement.

For police bodies the potential for the incorrect classification of revenue spend as capital is a particular area where there is a risk of management override.

We tested the appropriateness of journal entries recorded in the general ledger and other adjustments made in the preparation of the financial statements.

We reviewed material accounting estimates for evidence of management bias.

We evaluated the business rationale for any significant unusual transactions.

We reviewed capital expenditure on property, plant and equipment to ensure it meets the relevant accounting requirements to be capitalised.

Our sample testing of journal entries and other adjustments found that these were appropriate and materially accurate.

We did not find any evidence of management bias in material accounting estimates and no significant unusual transactions had taken place.

Our sample testing of capital additions found that expenditure on property, plant and equipment met the relevant accounting requirements to be capitalised.

Risk of fraud in revenue recognition (Group, PCC, CC)

Under ISA240 there is a presumed risk that revenue may be misstated due to improper recognition of revenue.

In the public sector, this requirement is modified by Practice Note 10, issued by the Financial Reporting Council, which states that auditors should also consider the risk that material misstatements may occur by the manipulation of expenditure recognition.

The potential for the incorrect classification of revenue spend as capital, as additions to property, plant and equipment, is a particular area where there is a risk of fraud in revenue recognition.

We reviewed and tested revenue and expenditure recognition policies.

We reviewed and discussed with management any accounting estimates on revenue or expenditure recognition for evidence of bias.

We developed a testing strategy to test material revenue and expenditure streams, including sample testing of contracts and income from fees and charges.

We reviewed and tested revenue cut-off for both income and expenditure at the period end date.

We reviewed capital expenditure on property, plant and equipment to ensure it meets the relevant accounting requirements to be capitalised.

Our review of policies and sample testing of income and expenditure streams found no evidence of fraud in revenue recognition.

We did not find any evidence of management bias in material accounting estimates.

Our sample testing of income and expenditure transactions at the period end date found that transactions had been recorded in the correct period.

Our sample testing of capital additions found that expenditure on property, plant and equipment met the relevant accounting requirements to be capitalised.


EY 6

We also identified the following audit risks during the planning phase of our audit, and reported these to you in our Audit Plan. Here, we set out how we have gained audit assurance over those issues.

Other Risks Audit procedures performed Assurance gained and issues arising

Revaluations (Group, PCC)

In 2014-15, we reported weaknesses in the detailed records in the fixed asset register impacted on the historic technical accounting transactions relating to accounting for revaluations of non-current assets in the Revaluation Reserve (RR) and Capital Adjustment Account (CAA).

The 2014-15 financial statements were amended to transfer the balance on the Revaluation Reserve as at 1 April 2014 to the CAA. The resulting balances were materially accurate and the fixed asset register was cleansed and updated.

However, there remains a potential risk of material misstatement from the incorrect accounting treatment of current year revaluations

IFRS 13: Fair Value Measurement has also been introduced into the Local Authority Accounting Code for the first time in 2015-16. This requires investment property to now be valued at highest and best use based on what someone would pay for the asset (previously valued at fair value based on existing use). The fair value of investment property held under a lease is the lease interest.

The change in the basis of the valuation of investment property means that potential changes in the assumptions underpinning the valuation could have a material impact on the carrying value in the financial statements.

We assessed the work of the valuers and reviewed the figures produced for the revaluation of the assets to ensure that an appropriate basis for valuation has been used.

We agreed the figures produced by the valuer for the revaluation of the assets to the asset register.

We sample tested the accounting transactions for the adjustments made in the financial statements to ensure the Group and PCC’s accounts are materially accurate and compliant with the CIPFA Code of Practice.

We assessed the valuation basis and work of the property valuers in relation to investment property and reviewing any material changes in carrying value that arise during 2015-16 as a result of the application of IFRS 13.

We reviewing and sample tested the accounting entries and disclosures made within the financial statements in relation to investment assets.

Our work on the valuation of assets and review of the figures produced by the valuer determined that the revaluation figures disclosed in the financial statements at year end is not materially misstated.

We agreed the figures produced for the revaluation of the assets to the fixed asset register and the financial statements.

Our sample testing confirmed there were no material differences between the revalued amount on the fixed asset register and the valuation certificates.

We determined that investment properties were revalued to fair value with corresponding revaluation gains or losses recognised. There were no material differences in the value of investment properties and balances were in line with our expectations.

Pension injury payments (Group, CC)

In 2014-15, an error in accounting for annual increases in injury pension payments was identified. As a result, Kent Police had been incorrectly charging the annual increases in these payments to the Police Pension Fund rather than the Comprehensive Income and Expenditure Statement (CIES)

This error was corrected in the 2014-15 financial statements. However, there remains a risk regarding the correct classification of current year payments.

We reviewed management’s response to the issues identified in 2014-15 and the associated controls.

We testing a sample of payments made in 2015-16 from the police pension fund to ensure they are correctly classified.

We reviewed the accounting treatment of police pension injury benefits and annual increases to ensure the accounts are materially accurate and compliant with the CIPFA Code of practice.

We obtained the year-end journals and supporting documentation for the annual increases in pension injury payments and confirmed that these had been correctly excluded from the Police Pension Fund and transferred to the CIES.

We randomly tested a sample of remaining items in the Police Pension Fund and confirmed that these were correct to be included.


EY 7

Other matters

As required by ISA (UK&I) 260 and other ISAs specifying communication requirements, we are required to communicate to you significant findings from the audit and other matters that are significant to your oversight of the PCC and CC financial reporting process, including the following:

Qualitative aspects of your accounting practices; estimates and disclosures;

Matters specifically required by other auditing standards to be communicated to those charged with governance. For example, issues about fraud, compliance with laws and regulations, external confirmations and related party transactions;

Any significant difficulties encountered during the audit; and

Other audit matters of governance interest

We have no matters we wish to report.

Control themes and observations

It is the responsibility of the PCC and CC to develop and implement systems of internal financial control and to put in place proper arrangements to monitor their adequacy and effectiveness in practice. Our responsibility as your auditor is to consider whether the PCC and CC have put adequate arrangements in place to satisfy themselves that the systems of internal financial control are both adequate and effective in practice.

We have tested the controls only to the extent necessary for us to complete our audit. We are not expressing an opinion on the overall effectiveness of internal control.

We tested controls relating to payroll and pension. We have not identified any significant deficiencies in the design or operation of an internal control that might result in a material misstatement in your financial statements of which you are not aware.

However, during our sample testing of journals, we found that the system allows journals to be posted without a description. Furthermore, our sample testing of contracts found that the contract register had not been kept up-to-date and in some instances the original signed contract could not be provided.

Further detail on these issues is included in the table below. The matters reported are limited to those deficiencies that we identified during the audit and that we concluded were of sufficient importance to merit being reported to you.


EY 8

We have reviewed the Joint Annual Governance Statement and can confirm that it not misleading or inconsistent with other information forthcoming from the audit or our knowledge of the PCC and CC.

Request for written representations

We have requested a management representation letter from both the PCC and CC to gain management’s confirmation in relation to a number of matters, as outlined in Appendix G and Appendix H.

Description Impact

Our sample testing identified a large number of journals which included no description. The finance team confirmed that the general ledger system does not prevent journals with no description from being posted.

We carried out further enquiries on material journals with no description and were provided with appropriate explanations and information by the finance team for a number of those journals.

The remaining material journals with no description comprised system generated and manual journals. We identified that the system generated journals related to cash and creditors transactions, which we had tested substantively and found no errors.

We tested the largest values from the manual journals and found that the journals had been raised appropriately.

However, this represents a weakness in the general ledger control.

Therefore, we recommend that the finance team should include a description with all journals that are posted and that periodic checks are carried out on the system to ensure this happening.

Our work on the contracts register identified that it had not been kept up-to-date and did not include all the expected information, such as dates of the contracts and contract values.

Our testing also found some instances, where the original signed contract could not be provided and alternative supporting documentation was provided to obtain our assurance.

As part of our work on related party transactions and review of material contracts, we requested a copy of Kent Police’s contract register. However, the first version that was provided to us did not contain certain key information, such as the start and end dates of the contracts, contract values, supplier details and whether the contract related to Kent or Essex Police.

We carried out further enquiries with staff and were provided with further details from which we were able to choose a sample for testing.

However, we found that copies of the original signed contract had not been retained and in some cases we had to seek other supporting documentation to obtain assurance over the contracts selected in our sample.

This represents a weakness in procurement controls and may lead to contacts coming up for renewal not been identified in a timely manner, or potential financial loss in the case of contractual disputes.

Therefore, we recommend that Kent Police reviews its contract register to ensure this includes all relevant and current information. Furthermore, Kent Police should also verify that it has original signed documents for all the contracts into which it has entered.


EY 9

Whole of Government Accounts

Alongside our work on the financial statements, we also review and report to the National Audit Office on your Whole of Government Accounts return. The extent of our review and the nature of our report are specified by the National Audit Office.

The Office of the PCC are updating the whole of government accounts return to reflect the changes that have been made to the statutory accounts. Once this has been done, we will perform the procedures required by the National Audit Office (NAO) regarding the Whole of Government Accounts submission.

Value for money

EY 10

4. Value for money

We are required to consider whether the PCC and CC have put in place ‘proper arrangements’ to secure economy, efficiency and effectiveness in their use of resources. This is known as our value for money conclusion.

Proper arrangements are defined by statutory guidance issued by the National Audit Office. They comprise your arrangements to:

► Take informed decisions; ► Deploy resources in a sustainable

manner; and ► Work with partners and other third

parties.

Overall conclusion

We identified the following significant risk in relation to these arrangements:

Deployment of resources in a sustainable manner. We have performed the procedures outlined in our audit plan as set out below. We did not identify any significant weaknesses in the arrangements of the PCC and CC to ensure they took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people

We therefore expect to conclude that you have put in place proper arrangements to secure value for money in your use of resources.

Significant risk

The table below presents the findings of our work in response to the risk area in out audit plan.

VFM risk identified within our audit plan

Impacts arrangements for: Key findings

Value for money

EY 11

.

The Office of the PCC and Office of the CC have continued to respond well to the financial challenges they, along with other public sector bodies, are facing. The size of that challenge is however significant. The Continuous Improvement Team has continued to challenging inefficiency and identify different ways of working. The change programme has also continued and is focussed on the three main areas of growing demand: counter terrorism, cyber crime and vulnerability. The Force has estimated that it will need some significant investment to deliver the services to meet some of these demands. Kent Police continue to challenge its ways of working, as well as developing wider collaboration with other organisations. Kent already shares support and serious crime units with Essex and a shared force control room is also being considered. A Demand Reduction Board and an Understanding Demand reference group have been established to help manage demand in the future. There have been some reductions in the scale of the challenge being faced, with the Chancellor announcement in the November 2015 Spending Review that the total budget for policing would be protected in real terms and that local force budgets would be protected in cash terms. As a result, the scale of the financial challenge faced by Kent Police over the medium term has been reduced, but still presents a significant challenge, with savings of £33.3 million required over the four year period from 2016/17 to 2019/20. Kent Police has responded to these pressures in both its budget for 2016/17 and the Medium Term Financial Plan (MTFS). The MTFP is continually updated and is based on realistic and prudent assumptions. The linkage between the MTFP and other plans such as the workforce strategy have also been strengthened. The 2016/17 budget is based upon a number of key spending assumptions which result in spending pressures of £13.4 million. To deal with this gap the PCC proposes to use £3.5 million of reserves and increase the precept for policing. The combination of precept increase and use of reserves reduce the saving gap in 2016/17 to £8.7 million. Plans have already been agreed to meet this gap with no impact on front-line policing. The PCC continues to maintain appropriate levels of reserves, with the total non-earmarked and earmarked reserves as at the 31 March 2016 expected to be £56.8 million. Of this, non-earmarked reserves total £5.6 million, which represents 2% of the net budget in line as recommended by the Chief Finance Officer. The remaining reserves are all earmarked, with £27.6 million identified to support investment and capital spending over the medium to long

Nationally, the Police sector has been subject to funding reductions over recent years. However, the funding settlement included in the Chancellor’s Autumn Statement in November 2015, was more positive that the PCC’s previous expectations.

The extent of financial pressures on the budget and reserves has therefore been reduced. However, there are still cost pressures and the need to achieve savings in both the 2016-17 budget and medium term financial plan still exists

Deploying resources in a sustainable manner.

We reviewed:

► The key assumptions made within the 2016-17 annual budget; and

► The adequacy of arrangements underpinning the development and delivery of the savings plans.

In undertaking our work we liaised closely with Her Majesty’s Inspectorate of Constabulary (HMIC) and have placed appropriate reliance on the police effectiveness, efficiency and legitimacy (PEEL) reviews that were undertaken in May 2016.

The key findings from our work are summarised below.

Value for money

EY 12

term. The MTFP includes planned use of reserves of £32.2 million over the next four years to 2019/20. HMIC’s 2015 report on police effectiveness, efficiency and legitimacy (PEEL) concluded the following:

The extent to which Kent Police is effective at keeping people safe and reducing crime is good.

The extent to which Kent Police is efficient at keeping people safe and reducing crime is good.

The extent to which Kent Police is legitimate at keeping people safe and reducing crime is outstanding.

In 2015, for the first time, HMIC also assessed leadership. This assessment concluded that:

Kent Police is a well led force. Its chief officers have communicated a clear and compelling sense of the force’s future plans and priorities that the workforce understands. Kent Police understands the current state of leadership at senior and middle levels, with work ongoing to better understand the current state of lower levels of leadership.

The force is developing leadership across all levels, motivating its workforce and encouraging engagement. The force’s performance systems are clear and it manages them effectively.

Other matters to bring to you attention

We did not identify any other issues that we need to ring to your attention as part of our audit.

Appendix A – Corrected and uncorrected audit differences

EY 13


Corrected differences

The following corrected differences, which are greater than £3.1 million, have been identified during the course of our audit and warrant communicating to you.

These items have been corrected by management within the revised financial statements.

Balance sheet and Statement of comprehensive income and expenditure (Group/PCC)

Police Pension Fund (Group/PCC and CC)

Item of account Balance sheet

(Decrease) / Increase

£m

Comprehensive income and expenditure statement


£m

Reclassification of assets of total value £5.746m relating to Athena from tangible to intangible

Property, plant and equipment – Assets under construction (In-year reclassification)

(2.773)

Intangibles (In-year reclassification) 2.773

Property, plant and equipment – Additions (2.973)

Intangibles – Additions (Assets under development)

2.973

Cumulative effect of adjusted differences 0

Item of account Police Pension Fund Account


£m

Disclosure on the Police Pension Fund for the payments to individuals and an equal amount for the funding received through the top up grant

Benefits payable - Payments in respect of Milne v GAD

9.006

Transfer of amount from the PCC of amount equal to the deficit - Milne v GAD

(9.006)

Cumulative effect of adjusted differences

0


EY 14

Disclosures

Uncorrected differences

As noted in the executive summary, there is one unadjusted audit difference which impacts on both the CC and PCC/Group accounts. This relates to claims for overtime from the undercover officers which have been received for Kent Police. The Force estimates that the potential liability for these claims is in the region of £480,000.

Balance sheet and Statement of comprehensive income and expenditure (Group/PCC and CC)

Disclosure Description of difference

Note 12 (CC) and Note 33 (Group/PCC)

Termination Benefits

Two redundancy payments relating to 2014/15 with a total value of £27,034 had been incorrectly included in the values in the termination benefits note.

Two redundancy payments relating to 2015/16 which had been paid in 2016/16 with a total value of £26,797 have been incorrectly excluded from the values in the termination benefits note.

The net impact of these errors is £238 and the accounts have therefore not been amended in this respect.

An amendment has however been made to the numbers of individuals receiving termination benefits in this note to remove the 2 individuals who had been incorrectly included from 2014/15 (the numbers already included the 2 individuals who were paid in 2015/16)

Note 28 (Group/PCC)

Related Parties

The disclosure for gas and electricity payments to Kent County Council should be updated from £2.7 million to £2.95 million to include accrued expenditure.

Item of account Balance sheet


£m

Comprehensive income and expenditure statement


£m

Potential liability in relation to legal challenge on overtime claims

CIES – increase in overtime expenses (net cost of policing)

0.480

BS provisions – increase in provision (0.480)

Cumulative effect of unadjusted differences (0.480) 0.480

Appendix B – Outstanding matters

EY 15

Appendix B – Outstanding matters

The following items relating to the completion of our audit procedures are outstanding at the date of the release of this report

Item Actions to resolve Responsibility

Management representation letter from PCC and CC

Receipt of signed letters of representation from PCC and CC

PCC, Chief Constable and Chief Finance Officers

Approval of amended financial statements from Kent Police and final director review

Final review and checking of the amended financial statements

Approval of accounts by PCC and Chief Constable

Accounts re-certified by Chief Finance Officers

PCC, Chief Constable, Chief Finance Officers, EY and management

Subsequent events review Completion of the subsequent events procedures to the date of signing the audit report

EY and management

Receipt of one bank and one investment confirmation

Management and EY to work together to obtain the outstanding confirmation

EY and management

Finalisation of Director review and follow up of review points from Manager and Director review of the audit work

Management and EY to work together on clearing review points and follow up questions

EY and management

Appendix C – Independence

EY 16

Appendix C – Independence

We confirm there are no changes in our assessment of independence since our confirmation in our Audit Plan dated 1 March 2016.

We complied with the Auditing Practices Board’s Ethical Standards for Auditors and the requirements of the Public Sector Audit Appointments Ltd (PSAA)’s Terms of Appointment. In our professional judgement the firm is independent and the objectivity of the audit engagement partner and audit staff has not been compromised within the meaning of regulatory and professional requirements.

We confirm that we are not aware of any relationships that may affect the independence and objectivity of the firm that we are required by auditing and ethical standards to report to you.

We consider that our independence in this context is a matter that should be reviewed by both you and ourselves. It is therefore important that you consider the facts of which you are aware and come to a view. If you wish to discuss any matters concerning our independence, we will be pleased to do so at the forthcoming meeting of the Joint Audit Committee on 26 September 2016.

We confirm that we have met the reporting requirements to the PCC and CC, as ‘those charged with governance’ under International Standards on Auditing (UK and Ireland) 260 – Communication with those charged with governance. Our communication plan to meet these requirements was set out in our Audit Plan of 1 March 2016.

Appendix D – Auditor fees

EY 17

Appendix D – Auditor fees

The table below sets out the scale fee and our final proposed audit fees.

Description Proposed final Fee

2015/16

£

Scale Fee 2015/16

£

Variation comments

Total Audit Fee – Code work - PCC 38,445 38,445 None

Total Audit Fee – Code work - CC 18,750 18,750 None

Our actual fee is in line with the scale fee set by the PSAA at this point in time, subject to satisfactory clearance of the outstanding work.

We confirm we have not undertaken any non-audit work outside of the PSAA’s requirements.

Appendix E – Draft audit report – Group/PCC

EY 18


INDEPENDENT AUDITOR’S REPORT TO THE POLICE AND CRIME COMMISSIONER FOR Kent

Opinion on the Police and Crime Commissioner for Kent financial statements

We have audited the financial statements of the Police and Crime Commissioner for Kent for the

year ended 31 March 2016 under the Local Audit and Accountability Act 2014. The financial

statements comprise the:

Police and Crime Commissioner for Kent and Group Comprehensive Income and Expenditure Statement;

Police and Crime Commissioner for Kent and Group Balance Sheet;

Police and Crime Commissioner for Kent and Group Cash Flow Statement;

Police and Crime Commissioner for Kent and Group Movement in Reserves Statement;

Police and Crime Commissioner for Kent Pension Fund Account Statements; and

related notes 1 to 41.

The financial reporting framework that has been applied in their preparation is applicable law and

the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom

2015/16.

This report is made solely to the Police and Crime Commissioner for Kent in accordance with Part 5

of the Local Audit and Accountability Act 2014 and for no other purpose, as set out in paragraph 43

of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector

Audit Appointments Limited. To the fullest extent permitted by law, we do not accept or assume

responsibility to anyone other than the Police and Crime Commissioner for Kent, for our audit work,

for this report, or for the opinions we have formed.

Respective responsibilities of the Chief Finance Officer and auditor

As explained more fully in the Statement of Responsibilities for the Statement Accounts set out on

page 6, the Chief Finance Officer is responsible for the preparation of the Statement of Accounts,

which includes the financial statements, in accordance with proper practices as set out in the

CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16,

and for being satisfied that they give a true and fair view. Our responsibility is to audit and express

an opinion on the financial statements in accordance with applicable law and International

Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing

Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements

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

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

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

accounting policies are appropriate to the Police and Crime Commissioner for Kent and Group’s

circumstances and have been consistently applied and adequately disclosed; the reasonableness

of significant accounting estimates made by the Chief Finance Officer; and the overall presentation

of the financial statements. In addition, we read all the financial and non-financial information in the

Group Accounts for the Police and Crime Commissioner for Kent and the Chief Constable for Kent


EY 19

Police Audited Statement of Accounts 2015-16 to identify material inconsistencies with the audited

financial statements and to identify any information that is apparently materially incorrect based on,

or materially inconsistent with, the knowledge acquired by us in the course of performing the audit.

If we become aware of any apparent material misstatements or inconsistencies we consider the

implications for our report.

Opinion on financial statements

In our opinion the financial statements:

give a true and fair view of the financial position of the Police and Crime Commissioner for Kent and Group as at 31 March 2016 and of its expenditure and income for the year then ended; and

have been prepared properly in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16.

Opinion on other matters

In our opinion, the information given in the Group Accounts for the Police and Crime Commissioner

for Kent and the Chief Constable for Kent Police Audited Statement of Accounts 2015-16 for the

financial year for which the financial statements are prepared is consistent with the financial

statements.

Matters on which we report by exception

We report to you if:

in our opinion the annual governance statement is misleading or inconsistent with other information forthcoming from the audit or our knowledge of the Council;

we issue a report in the public interest under section 24 of the Local Audit and Accountability Act 2014;

we make written recommendations to the audited body under Section 24 of the Local Audit and Accountability Act 2014;

we make an application to the court for a declaration that an item of account is contrary to law under Section 28 of the Local Audit and Accountability Act 2014;

we issue an advisory notice under Section 29 of the Local Audit and Accountability Act 2014;or

we make an application for judicial review under Section 31 of the Local Audit and Accountability Act 2014.

We have nothing to report in these respects

Conclusion on the Police and Crime Commissioner’s arrangements for securing economy, efficiency and effectiveness in the use of resources

Police and Crime Commissioner’s responsibilities

The Police and Crime Commissioner is responsible for putting in place proper arrangements to

secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship

and governance, and to review regularly the adequacy and effectiveness of these arrangements.

Auditor’s responsibilities

We are required under Section 20(1)(c) of the Local Audit and Accountability Act 2014 to satisfy

ourselves that the Police and Crime Commissioner has made proper arrangements for securing


EY 20

economy, efficiency and effectiveness in its use of resources. The Code of Audit Practice issued by

the National Audit Office (NAO) requires us to report to you our conclusion relating to proper

arrangements.

We report if significant matters have come to our attention which prevent us from concluding that

the Police and Crime Commissioner has put in place proper arrangements for securing economy,

efficiency and effectiveness in its use of resources. We are not required to consider, nor have we

considered, whether all aspects of the Authority’s arrangements for securing economy, efficiency

and effectiveness in its use of resources are operating effectively.

Scope of the review of arrangements for securing economy, efficiency and effectiveness in the use of resources

We have undertaken our review in accordance with the Code of Audit Practice, having regard to the

guidance on the specified criterion issued by the Comptroller and Auditor General (C&AG) in

November 2015, as to whether the [PCC] had proper arrangements to ensure it took properly

informed decisions and deployed resources to achieve planned and sustainable outcomes for

taxpayers and local people. The Comptroller and Auditor General determined this criterion as that

necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether the

Police and Crime Commissioner for Kent put in place proper arrangements for securing economy,

efficiency and effectiveness in its use of resources for the year ended 31 March 2016.

We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment,

we undertook such work as we considered necessary to form a view on whether, in all significant

respects, the Police and Crime Commissioner for Kent had put in place proper arrangements to

secure economy, efficiency and effectiveness in its use of resources.

Conclusion

On the basis of our work, having regard to the guidance issued by the C&AG in November 2015, we

are satisfied that, in all significant respects, Police and Crime Commissioner for Kent put in place

proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the

year ended 31 March 2016.

Delay in certification of completion of the audit

We cannot formally conclude the audit and issue an audit certificate until we have completed the

work necessary to issue our assurance statement in respect of the Police and Crime

Commissioner’s Whole of Government Accounts consolidation pack. We are satisfied that this work

does not have a material effect on the financial statements or on our value for money conclusion.

Debbie Hanson, Executive Director

for and on behalf of Ernst & Young LLP, Appointed Auditor

Luton

12 August 2016

Appendix F – Draft audit report – CC

EY 21


INDEPENDENT AUDITOR’S REPORT TO THE CHIEF CONSTABLE FOR KENT

Opinion on the Chief Constable for Kent financial statements

We have audited the financial statements of the Chief Constable for Kent for the year ended 31

March 2016 under the Local Audit and Accountability Act 2014. The financial statements comprise

the:

Chief Constable for Kent Comprehensive Income and Expenditure Statement;

Chief Constable for Kent Balance Sheet;

Chief Constable for Kent Cash Flow Statement

Chief Constable for Kent Movement in Reserves Statement and the related notes 1 to 16

Chief Constable for Kent Police officer Pension Fund Account.

The financial reporting framework that has been applied in their preparation is applicable law and

the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom

2015/16.

This report is made solely to the Chief Constable for Kent in accordance with Part 5 of the Local

Audit and Accountability Act 2014 and for no other purpose, as set out in paragraph 43 of the

Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit

Appointments Limited. To the fullest extent permitted by law, we do not accept or assume

responsibility to anyone other than the Chief Constable for Kent, for our audit work, for this report,

or for the opinions we have formed.

Respective responsibilities of the Chief Finance Office or the Chief Constable and auditor

As explained more fully in the Statement of Responsibilities for the Statement of Accounts for the

Chief Constable of Kent set out on page 6, the Chief Finance Officer of the Chief Constable is

responsible for the preparation of the Statement of Accounts, which includes the financial

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

on Local Authority Accounting in the United Kingdom 2015/16, and for being satisfied that they give

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

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

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

Scope of the audit of the financial statements

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

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

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

accounting policies are appropriate to the Chief Constable for Kent circumstances and have been

consistently applied and adequately disclosed; the reasonableness of significant accounting

estimates made by the Chief Finance Officer of the Chief Constable; and the overall presentation of

the financial statements. In addition, we read all the financial and non-financial information in the

Accounts for the Chief Constable for Kent Police Audited Statement of Accounts 2015-16 to identify

material inconsistencies with the audited financial statements and to identify any information that is

apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by


EY 22

us in the course of performing the audit. If we become aware of any apparent material

misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

give a true and fair view of the financial position of the Chief Constable for Kent as at 31 March 2016 and of its expenditure and income for the year then ended; and

have been prepared properly in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16.

Opinion on other matters

In our opinion, the information given in the Accounts for the Chief Constable for Kent Police Audited

Statement of Accounts 2015-16 for the financial year for which the financial statements are

prepared is consistent with the financial statements.

Matters on which we report by exception

We report if:

in our opinion the annual governance statement is misleading or inconsistent with other information forthcoming from the audit or our knowledge of the Council;

we issue a report in the public interest under section 24 of the Local Audit and Accountability Act 2014;

we make written recommendations to the audited body under Section 24 of the Local Audit and Accountability Act 2014;

we make an application to the court for a declaration that an item of account is contrary to law under Section 28 of the Local Audit and Accountability Act 2014;

we issue an advisory notice under Section 29 of the Local Audit and Accountability Act 2014;or

we make an application for judicial review under Section 31 of the Local Audit and Accountability Act 2014.

We have nothing to report in these respects

Conclusion on the Chief Constable’s arrangements for securing economy, efficiency and effectiveness in the use of resources

Chief Constable’s responsibilities

The Chief Constable is responsible for putting in place proper arrangements to secure economy,

efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance,

and to review regularly the adequacy and effectiveness of these arrangements.


We are required under Section 20(1)(c) of the Local Audit and Accountability Act 2014 to satisfy

ourselves that the Authority has made proper arrangements for securing economy, efficiency and

effectiveness in its use of resources. The Code of Audit Practice issued by the National Audit Office

(NAO) requires us to report to you our conclusion relating to proper arrangements.


EY 23

We report if significant matters have come to our attention which prevent us from concluding that

the Chief Constable has put in place proper arrangements for securing economy, efficiency and

effectiveness in its use of resources. We are not required to consider, nor have we considered,

whether all aspects of the Chief Constable’s arrangements for securing economy, efficiency and

effectiveness in its use of resources are operating effectively.

Scope of the review of arrangements for securing economy, efficiency and effectiveness in the use of resources

We have undertaken our review in accordance with the Code of Audit Practice, having regard to the

guidance on the specified criterion issued by the Comptroller and Auditor General (C&AG) in

November 2015, as to whether the Chief Constable had proper arrangements to ensure it took

properly informed decisions and deployed resources to achieve planned and sustainable outcomes

for taxpayers and local people. The Comptroller and Auditor General determined this criterion as

that necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether

the Chief Constable put in place proper arrangements for securing economy, efficiency and

effectiveness in its use of resources for the year ended 31 March 2016.

We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment,

we undertook such work as we considered necessary to form a view on whether, in all significant

respects, the Chief Constable had put in place proper arrangements to secure economy, efficiency

and effectiveness in its use of resources.

Conclusion

On the basis of our work, having regard to the guidance issued by the C&AG in November 2015, we

are satisfied that, in all significant respects, Chief Constable put in place proper arrangements to

secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March

2016.

Certificate

We certify that we have completed the audit of the accounts of the Chief Constable for Kent in

accordance with the requirements of the Local Audit and Accountability Act 2014 and the Code of

Audit Practice issued by the National Audit Office.

Debbie Hanson, Executive Director

for and on behalf of Ernst & Young LLP, Appointed Auditor

Luton

12 August 2016

Appendix G – Management representation letter – Group/PCC

EY 24


[To be prepared on the entity’s letterhead]

[Date]

Debbie Hanson

Ernst & Young

400 Capability Green

Luton

Bedfordshire

LU1 3LU

Dear Debbie,

Kent Police

Letter of Representations

This letter of representations is provided in connection with your audit of the financial statements of the Office of the Police and Crime Commissioner for Kent and Group (“the PCC Office”) for the year ended 31 March 2016. We recognise that obtaining representations from us concerning the information contained in this letter is a significant procedure in enabling you to form an opinion as to whether the financial statements give a true and fair view of the financial position of the PCC Office as of 31 March 2016 and of its income and expenditure for the year then ended in accordance with the CIPFA LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16.

We understand that the purpose of your audit of our financial statements is to express an opinion thereon and that your audit was conducted in accordance with International Standards on Auditing (UK and Ireland), which involves an examination of the accounting system, internal control and related data to the extent you considered necessary in the circumstances, and is not designed to identify - nor necessarily be expected to disclose - all fraud, shortages, errors and other irregularities, should any exist.

Accordingly, we make the following representations, which are true to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves:

A. Financial Statements and Financial Records

1. We have fulfilled our responsibilities, under the relevant statutory authorities, for the

preparation of the financial statements in accordance with [the Accounts and Audit

Regulations 2015 and CIPFA LASAAC Code of Practice on Local Authority Accounting

in the United Kingdom 2015/16].


EY 25

2. We acknowledge, as those charged with governance and members of management of

the PCC Office, our responsibility for the fair presentation of the financial statements.

We believe the financial statements referred to above give a true and fair view of the

financial position, financial performance (or results of operations) and cash flows of the

PCC Office in accordance with [the CIPFA LASAAC Code of Practice on Local Authority

Accounting in the United Kingdom 2015/16. We have approved the financial statements.

3. The significant accounting policies adopted in the preparation of the financial statements

are appropriately described in the financial statements.

4. As those charged with governance and members of management of the PCC Office, we

believe that the PCC office has a system of internal controls adequate to enable the

preparation of accurate financial statements in accordance with the CIPFA LASAAC

Code of Practice on Local Authority Accounting in the United Kingdom 2015/16, that are

free from material misstatement, whether due to fraud or error.

5. We believe that the effects of any unadjusted audit differences, summarised in the

accompanying schedule, accumulated by you during the current audit and pertaining to

the latest period presented are immaterial, both individually and in the aggregate, to the

financial statements taken as a whole. We have not corrected these differences

identified by and brought to the attention from the auditor because of the reasons

specified in the Schedule of Unadjusted Differences.

OR

6. There are no unadjusted audit differences identified during the current audit and

pertaining to the latest period presented.

B. Fraud

1. We acknowledge that we are responsible for the design, implementation and

maintenance of internal controls to prevent and detect fraud.

2. We have disclosed to you the results of our assessment of the risk that the financial

statements may be materially misstated as a result of fraud.

3. We have disclosed to you all significant facts relating to any frauds, suspected frauds or

allegations of fraud known to us that may have affected the PCC Office (regardless of

the source or form and including, without limitation, allegations by “whistle-blowers”),

whether involving management or employees who have significant roles in internal

control. Similarly, we have disclosed to you our knowledge of frauds or suspected

frauds affecting the entity involving others where the fraud could have a material effect

on the financial statements. We have also disclosed to you all information in relation to

any allegations of fraud or suspected fraud communicated by employees, former

employees, analysts, regulators or others, that could affect the financial statements.

OR

4. We have no knowledge of any fraud or suspected fraud involving management or other

employees who have a significant role in the PCC Office’s internal controls over financial

reporting. In addition, we have no knowledge of any fraud or suspected fraud involving

other employees in which the fraud could have a material effect on the PCC Office

financial statements. We have no knowledge of any allegations of financial

improprieties, including fraud or suspected fraud, (regardless of the source or form and

including without limitation, any allegations by “whistleblowers”) which could result in a

misstatement of the PCC Office financial statements or otherwise affect the financial

reporting of the PCC Office.


EY 26

C. Compliance with Laws and Regulations

1. We have disclosed to you all identified or suspected non-compliance with laws and

regulations whose effects should be considered when preparing the financial

statements.

D. Information Provided and Completeness of Information and Transactions

1. We have provided you with:

Access to all information of which we are aware that is relevant to the preparation of

the financial statements such as records, documentation and other matters;

Additional information that you have requested from us for the purpose of the audit;

and

Unrestricted access to persons within the entity from whom you determined it

necessary to obtain audit evidence.

2. All material transactions have been recorded in the accounting records and are reflected

in the financial statements.

3. We have made available to you all minutes of the meetings of the PCC, and committees,

including the Joint Audit Committee or summaries of actions of recent meetings for

which minutes have not yet been prepared held through the to the most recent meeting

on the following date:

4. We confirm the completeness of information provided regarding the identification of

related parties. We have disclosed to you the identity of the PCC Office’s related parties

and all related party relationships and transactions of which we are aware, including

sales, purchases, loans, transfers of assets, liabilities and services, leasing

arrangements, guarantees, non-monetary transactions and transactions for no

consideration for the period ended, as well as related balances due to or from such

parties at the period end. These transactions have been appropriately accounted for

and disclosed in the financial statements.

5. We believe that the significant assumptions we used in making accounting estimates,

including those measured at fair value, are reasonable.

6. We have disclosed to you, and the PCC Office has complied with, all aspects of

contractual agreements that could have a material effect on the financial statements in

the event of non-compliance, including all covenants, conditions or other requirements of

all outstanding debt.

E. Liabilities and Contingencies

1. All liabilities and contingencies, including those associated with guarantees, whether

written or oral, have been disclosed to you and are appropriately reflected in the financial

statements.

2. We have informed you of all outstanding and possible litigation and claims, whether or

not they have been discussed with legal counsel.

3. We have recorded and/or disclosed, as appropriate, all liabilities related litigation and

claims, both actual and contingent. There are no guarantees that we have given to third

parties.


EY 27

F. Subsequent Events

1. As described in Note xx to the financial statements, there have been no events

subsequent to period end which require adjustment of or disclosure in the financial

statements or notes thereto.

Representations required in specific circumstances

G. Use of the Work of a Specialist

1. We agree with the findings of the specialists that we engaged to evaluate the

measurement and valuation of Property and the Pension Fund and have adequately

considered the qualifications of the specialists in determining the amounts and

disclosures included in the financial statements and the underlying accounting records.

We did not give or cause any instructions to be given to the specialists with respect to

the values or amounts derived in an attempt to bias their work, and we are not otherwise

aware of any matters that have had an effect on the independence or objectivity of the

specialists.

H. Accounting Estimates (pensions, investment properties and property plant and equipment valuations)

1. We believe that the measurement processes, including related assumptions and models,

used to determine the accounting estimate(s) have been consistently applied and are

appropriate in the context of the CIPFA LASAAC Code of Practice on Local Authority

Accounting in the United Kingdom 2015/16.

2. We confirm that the significant assumptions used in making the estimates for property,

plant and equipment, investment properties and pension liabilities appropriately reflect

our intent and ability to continue to provide services on behalf of the entity

3. We confirm that the disclosures made in the financial statements with respect to the

accounting estimates are complete and made in accordance with the CIPFA LASAAC

Code of Practice on Local Authority Accounting in the United Kingdom 2015/16.

4. We confirm that no adjustments are required to the accounting estimate(s) and

disclosures in the financial statements due to subsequent events

I. Ownership of Assets

5. Except for assets capitalised under finance leases, the PCC Office has satisfactory title to

all assets appearing in the balance sheet, and there are no liens or encumbrances on the

PCC Office assets, nor has any asset been pledged as collateral. All assets to which the

PCC Office has satisfactory title appear in the balance sheet.

6. All agreements and options to buy back assets previously sold have been properly

recorded and adequately disclosed in the consolidated and council financial statements.

7. We have no plans to abandon lines of product or other plans or intentions that will result

in any excess or obsolete inventory, and no inventory is stated at an amount in excess of

net realisable value.

8. There are no formal or informal compensating balance arrangements with any of our

cash and investment accounts.


EY 28

J. Retirement Benefits

1. On the basis of the process established by us and having made appropriate enquiries,

we are satisfied that the actuarial assumptions underlying the scheme liabilities are

consistent with our knowledge of the business. All significant retirement benefits and all

settlements and curtailments have been identified and properly accounted for.

K. Contingent Liabilities

1. We are unaware of any violations or possible violations of laws or regulations the effects

of which should be considered for disclosure in the PCC Office financial statements or

as the basis of recording a contingent loss (other than those disclosed or accrued in the

consolidated and council financial statements).

2. We are unaware of any known or probable instances of non-compliance with the

requirements of regulatory or governmental authorities, including their financial reporting

requirements, and there have been no communications from regulatory agencies or

government representatives concerning investigations or allegations of non-compliance,

except as follows:

Matters of routine, normal, recurring nature (e.g., examinations by bank and

insurance examiners, examinations by taxing authorities]) none of which

involves any allegations of noncompliance with laws or regulations that should

be considered for disclosure in the PCC Office financial statements or as a basis

for recording a loss contingency.

L. Purchase and Sales Commitments and Sales Terms

1. At the year end, the PCC Office had no unusual commitments or contractual obligations

of any sort which were not in the ordinary course of business and which might have an

adverse effect upon the council (e.g., contracts or purchase agreements above market

price; repurchase or other agreements not in the ordinary course of business; material

commitments for the purchase of property, plant and equipment; significant foreign

exchange commitments; open balances on letters of credit; purchase commitments for

inventory quantities in excess of normal requirements or at prices in excess of the

prevailing market prices; losses from fulfilment of, or inability to fulfil, sales commitments,

etc.)

Yours Sincerely,

___________________

Chief Finance Office to the Police and Crime Commissioner

___________________

Police and Crime Commissioner

Appendix H – Management representation letter – CC

EY 29


[To be prepared on the entity’s letterhead]

[Date]

Debbie Hanson

Ernst & Young

400 Capability Green

Luton

Bedfordshire

LU1 3LU

Dear Debbie,

Kent Police

Letter of Representations

This letter of representations is provided in connection with your audit of the financial statements of the Chief Constable of Kent (“the CC”) for the year ended 31 March 2016. We recognise that obtaining representations from us concerning the information contained in this letter is a significant procedure in enabling you to form an opinion as to whether the financial statements give a true and fair view of the financial position of the CC as of 31 March 2016 and of its income and expenditure for the year then ended in accordance with the CIPFA LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16.

We understand that the purpose of your audit of our financial statements is to express an opinion thereon and that your audit was conducted in accordance with International Standards on Auditing (UK and Ireland), which involves an examination of the accounting system, internal control and related data to the extent you considered necessary in the circumstances, and is not designed to identify - nor necessarily be expected to disclose - all fraud, shortages, errors and other irregularities, should any exist.

Accordingly, we make the following representations, which are true to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves:

A. Financial Statements and Financial Records

7. We have fulfilled our responsibilities, under the relevant statutory authorities, for the

preparation of the financial statements in accordance with [the Accounts and Audit

Regulations 2015 and CIPFA LASAAC Code of Practice on Local Authority Accounting

in the United Kingdom 2015/16].

8. We acknowledge, as those charged with governance and members of management of

the CC, our responsibility for the fair presentation of the financial statements. We


EY 30

believe the financial statements referred to above give a true and fair view of the

financial position, financial performance (or results of operations) and cash flows of the

CC in accordance with [the CIPFA LASAAC Code of Practice on Local Authority

Accounting in the United Kingdom 2015/16. We have approved the financial statements.

9. The significant accounting policies adopted in the preparation of the financial statements

are appropriately described in the financial statements.

10. As those charged with governance and members of management of the CC, we believe

that the CC has a system of internal controls adequate to enable the preparation of

accurate financial statements in accordance with the CIPFA LASAAC Code of Practice

on Local Authority Accounting in the United Kingdom 2015/16, that are free from

material misstatement, whether due to fraud or error.

11. We believe that the effects of any unadjusted audit differences, summarised in the

accompanying schedule, accumulated by you during the current audit and pertaining to

the latest period presented are immaterial, both individually and in the aggregate, to the

financial statements taken as a whole. We have not corrected these differences

identified by and brought to the attention from the auditor because of the reasons

specified in the Schedule of Unadjusted Differences.

OR

12. There are no unadjusted audit differences identified during the current audit and

pertaining to the latest period presented.

M. Fraud

3. We acknowledge that we are responsible for the design, implementation and

maintenance of internal controls to prevent and detect fraud.

4. We have disclosed to you the results of our assessment of the risk that the financial

statements may be materially misstated as a result of fraud.

3. We have disclosed to you all significant facts relating to any frauds, suspected frauds or

allegations of fraud known to us that may have affected the CC (regardless of the source

or form and including, without limitation, allegations by “whistle-blowers”), whether

involving management or employees who have significant roles in internal control.

Similarly, we have disclosed to you our knowledge of frauds or suspected frauds

affecting the entity involving others where the fraud could have a material effect on the

financial statements. We have also disclosed to you all information in relation to any

allegations of fraud or suspected fraud communicated by employees, former employees,

analysts, regulators or others, that could affect the financial statements.

OR

4. We have no knowledge of any fraud or suspected fraud involving management or other

employees who have a significant role in the CC’s internal controls over financial

reporting. In addition, we have no knowledge of any fraud or suspected fraud involving

other employees in which the fraud could have a material effect on the CC financial

statements. We have no knowledge of any allegations of financial improprieties,

including fraud or suspected fraud, (regardless of the source or form and including

without limitation, any allegations by “whistleblowers”) which could result in a

misstatement of the CC financial statements or otherwise affect the financial reporting of

the CC.


EY 31

N. Compliance with Laws and Regulations

1. We have disclosed to you all identified or suspected non-compliance with laws and

regulations whose effects should be considered when preparing the financial

statements.

O. Information Provided and Completeness of Information and Transactions

7. We have provided you with:

Access to all information of which we are aware that is relevant to the preparation of

the financial statements such as records, documentation and other matters;

Additional information that you have requested from us for the purpose of the audit;

and

Unrestricted access to persons within the entity from whom you determined it

necessary to obtain audit evidence.

8. All material transactions have been recorded in the accounting records and are reflected

in the financial statements.

9. We have made available to you all minutes of the meetings of the CC, and committees,

including the Joint Audit Committee or summaries of actions of recent meetings for

which minutes have not yet been prepared held through the to the most recent meeting

on the following date:

10. We confirm the completeness of information provided regarding the identification of

related parties. We have disclosed to you the identity of the CC’s related parties and all

related party relationships and transactions of which we are aware, including sales,

purchases, loans, transfers of assets, liabilities and services, leasing arrangements,

guarantees, non-monetary transactions and transactions for no consideration for the

period ended, as well as related balances due to or from such parties at the period end.

These transactions have been appropriately accounted for and disclosed in the financial

statements.

11. We believe that the significant assumptions we used in making accounting estimates,

including those measured at fair value, are reasonable.

12. We have disclosed to you, and the CC has complied with, all aspects of contractual

agreements that could have a material effect on the financial statements in the event of

non-compliance, including all covenants, conditions or other requirements of all

outstanding debt.

P. Liabilities and Contingencies

4. All liabilities and contingencies, including those associated with guarantees, whether

written or oral, have been disclosed to you and are appropriately reflected in the financial

statements.

5. We have informed you of all outstanding and possible litigation and claims, whether or

not they have been discussed with legal counsel.

6. We have recorded and/or disclosed, as appropriate, all liabilities related litigation and

claims, both actual and contingent. There are no guarantees that we have given to third

parties.


EY 32

Q. Subsequent Events

2. As described in Note xx to the financial statements, there have been no events

subsequent to period end which require adjustment of or disclosure in the financial

statements or notes thereto.

Representations required in specific circumstances

R. Use of the Work of a Specialist

2. We agree with the findings of the specialists that we engaged to evaluate the

measurement and valuation of the Pension Fund and have adequately considered the

qualifications of the specialists in determining the amounts and disclosures included in

the financial statements and the underlying accounting records. We did not give or

cause any instructions to be given to the specialists with respect to the values or

amounts derived in an attempt to bias their work, and we are not otherwise aware of any

matters that have had an effect on the independence or objectivity of the specialists.

S. Accounting Estimates (pensions valuations)


used to determine the accounting estimate have been consistently applied and are



10. We confirm that the significant assumptions used in making the estimate for pension

liabilities appropriately reflect our intent and ability to continue to provide services on

behalf of the entity

11. We confirm that the disclosures made in the financial statements with respect to the

accounting estimates are complete and made in accordance with the CIPFA LASAAC

Code of Practice on Local Authority Accounting in the United Kingdom 2015/16.


used to determine the accounting estimate(s) have been consistently applied and are



13. We confirm that no adjustments are required to the accounting estimate(s) and

disclosures in the financial statements due to subsequent events

T. Retirement Benefits

2. On the basis of the process established by us and having made appropriate enquiries,

we are satisfied that the actuarial assumptions underlying the scheme liabilities are

consistent with our knowledge of the business. All significant retirement benefits and all

settlements and curtailments have been identified and properly accounted for.

U. Contingent Liabilities

3. We are unaware of any violations or possible violations of laws or regulations the effects

of which should be considered for disclosure in the CC financial statements or as the

basis of recording a contingent loss (other than those disclosed or accrued in the

consolidated and council financial statements).


EY 33

4. We are unaware of any known or probable instances of non-compliance with the

requirements of regulatory or governmental authorities, including their financial reporting

requirements, and there have been no communications from regulatory agencies or

government representatives concerning investigations or allegations of non-compliance,

except as follows:

Matters of routine, normal, recurring nature (e.g., examinations by bank and

insurance examiners, examinations by taxing authorities]) none of which

involves any allegations of noncompliance with laws or regulations that should

be considered for disclosure in the CC financial statements or as a basis for

recording a loss contingency.

V. Purchase and Sales Commitments and Sales Terms

2. At the year end, the CC had no unusual commitments or contractual obligations of any

sort which were not in the ordinary course of business and which might have an adverse

effect upon the council (e.g., contracts or purchase agreements above market price;

repurchase or other agreements not in the ordinary course of business; material

commitments for the purchase of property, plant and equipment; significant foreign

exchange commitments; open balances on letters of credit; purchase commitments for

inventory quantities in excess of normal requirements or at prices in excess of the

prevailing market prices; losses from fulfilment of, or inability to fulfil, sales commitments,

etc.)

Yours Sincerely,

___________________

Chief Finance Office to the Chief Constable

___________________

Chief Constable

Appendix I – Required communications with the audit committee

EY 34


There are certain communications that we must provide to the Audit Committee of UK clients. These are detailed here:

Required communication Reference

Planning and audit approach

Communication of the planned scope and timing of the audit, including any limitations.

Audit Plan

Significant findings from the audit

► Our view about the significant qualitative aspects of accounting practices including accounting policies, accounting estimates and financial statement disclosures

► Significant difficulties, if any, encountered during the audit

► Significant matters, if any, arising from the audit that were discussed with management

► Written representations that we are seeking

► Expected modifications to the audit report

► Other matters if any, significant to the oversight of the financial reporting process

Audit Results Report

Going concern

Events or conditions identified that may cast significant doubt on the entity’s ability to continue as a going concern, including:

► Whether the events or conditions constitute a material uncertainty

► Whether the use of the going concern assumption is appropriate in the preparation and presentation of the financial statements

► The adequacy of related disclosures in the financial statements

No conditions or events were identified, either individually or in aggregate, that indicated there could be doubt about Kent Police’s ability to continue as a going concern for the 12 months from the date of our report.

Misstatements

► Uncorrected misstatements and their effect on our audit opinion

► The effect of uncorrected misstatements related to prior periods

► A request that any uncorrected misstatement be corrected

► In writing, corrected misstatements that are significant


Fraud

► Enquiries of the audit committee to determine whether they have knowledge of any actual, suspected or alleged fraud affecting the entity

► Any fraud that we have identified or information we have obtained that indicates that a fraud may exist

► A discussion of any other matters related to fraud

We have made enquiries of management. We have not becaome aware of any fraud or illegal acts during our audit.

Related parties

Significant matters arising during the audit in connection with the entity’s related parties including, when applicable:

► Non-disclosure by management

► Inappropriate authorisation and approval of transactions

► Disagreement over disclosures

► Non-compliance with laws and regulations

► Difficulty in identifying the party that ultimately controls the entity

We have no matters we wish to report.


EY 35

Required communication Reference

External confirmations

► Management’s refusal for us to request confirmations

► Inability to obtain relevant and reliable audit evidence from other procedures

We have received all requested confirmations, with the exception of one investment and one bank confirmation. We have performed alternative procedures to gain assurance over these balances.

Consideration of laws and regulations

► Audit findings regarding non-compliance where the non-compliance is material and believed to be intentional. This communication is subject to compliance with legislation on tipping off

► Enquiry of the audit committee into possible instances of non-compliance with laws and regulations that may have a material effect on the financial statements and that the audit committee may be aware of

We have not identified any material instances of non-compliance with laws and regulations.

Independence

Communication of all significant facts and matters that bear on EY’s objectivity and independence

Communication of key elements of the audit engagement partner’s consideration of independence and objectivity such as:

► The principal threats

► Safeguards adopted and their effectiveness

► An overall assessment of threats and safeguards

► Information about the general policies and process within the firm to maintain objectivity and independence

Audit Plan and Audit Results Report

Significant deficiencies in internal controls identified during the audit Audit Results Report

Fee Information

► Breakdown of fee information at the agreement of the initial audit plan

► Breakdown of fee information at the completion of the audit

Audit Plan


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Contents at a glance

Government and economic news

Accounting, auditing and governance

Key questions for the Audit Committee

Find out more

Police sector Audit Committee briefing

This sector briefing is one of the ways that we hope to continue to support you and your organisation in an environment that is constantly changing and evolving.

It covers issues which may have an impact on your organisation, the Police sector and the audits that we undertake. The public sector audit specialists who transferred from the Audit Commission form part of EY’s national Government and Public Sector (GPS) team. Their extensive public sector knowledge is now supported by the wider expertise across EY’s UK and international business.

This briefing reflects this, bringing together not only technical issues relevant to the Police sector but wider matters of potential interest to you and your organisation.

Links to where you can find out more on any of the articles featured can be found at the end of the briefing, as well as some examples of areas where EY can provide support to Police Services. We hope that you find the briefing informative and should this raise any issues that you would like to discuss further please contact your local audit team.

2 | Police sector Audit Committee briefing


EU Referendum24 June saw the outcome of the referendum concerning the United Kingdom’s membership of the European Union. The result was a narrow decision to leave, precipitating the resignation of David Cameron as Prime Minister, and the appointment of Theresa May. David Davis (Secretary of State for Exiting the EU) has been tasked with negotiating the UK’s exit from the EU.

EY recognises that our clients will be planning to navigate what lies ahead. As a firm, we have been considering the consequences of both possible outcomes both for ourselves and for our clients.

Some considerations for Police bodies include:

► There may be an impact on migration. This could be an issue where a significant proportion of staff employed by the Force is from countries within the European Union

► The impact on regulation, including the working time directive, procurement and competition law

If you have any questions arising from the referendum result, please don’t hesitate to contact your engagement manager.

Policing and Crime Bill: overarching documents including overview of the billThe Home Office has published a factsheet which details the key elements of the Policing and Crime Bill which came before Parliament in spring 2016. The Policing and Crime Bill covers a number of different areas. These include:

Part 1: Emergency Services Collaboration

A key theme within the Bill is the desire to ensure greater collaboration between the three key emergency services. Suggestions within the Bill include an increased role for local Police and Crime Commissioner’s in taking on responsibility for Fire and Rescue services.

In London the bill would see the Mayor of London taking on direct responsibility for the Fire and Rescue service in London. As a result the London Fire and Emergency Planning Authority would be abolished.

Part 2 (covers chapters 1–4: Police Discipline Complaints and Inspection

The Bill would also see local PCC’s taking on additional roles in respect of the local police complaints system. As a result local PCC’s would be the appellate body. This role is currently undertaken by local Chief Constables.

The PCCs would also assume responsibility for the front end of the complaints system and be responsible for all forms of liaison with the complainant.

These arrangements could require an increase in the staffing provision for local PCC’s and in some cases may require a staff TUPE arrangement between the Chief Constable and the office of the PCC to enable them to complete this new role.

Other measures would see increased protection for whistle blowers which would enable the Independent Police Complaints Commission to undertake internal investigations with only the knowledge of a limited number of individuals being aware of this.

Another new provision within the Bill would be the introduction of a so-called ‘super-complaint’. This would enable cross-force or national issues to be captured which would otherwise be missed under the current system.

Chapter 5: Inspection

A key element of the Bill is in respect of the increased role of key inspectorates, such as HMIC, and giving them the flexibility to initiate a range of inspections not specifically included within the national inspection programme. The Bill would also see a new requirement to respond to HMIC inspection reports within 56 days.



Part 3: Police workforce and representative institutions

Part 3 would confer greater power on Chief Constables to increase the powers of special constables and volunteers.

The remainder of the Bill touches on the following key areas:

► Police Powers

► Police and Crime Commissioners and Police Areas

► Financial Sanctions

► National Crime Agency

► Child Sexual Exploitation

HMIC Inspection Report: use of the National Police Computer by Non-Police OrganisationsIn May 2016 HMIC published an Inspection Report into the use of the National Police Computer by Non-Police Organisations. This enables non-police organisations to access information such as the police criminal records check of an individual or a vehicle registration check.

The Terms of Reference of the Inspection programme set out to answer the following three questions:

1. Is the level of access specified in the Supply Agreement appropriate for the needs of the non-police organisation?

2. Does the non-police organisation comply with the Security Operating Procedures? In particular, are the arrangements for training, physical security, and internal audit compliant with the Security Operating Procedures?

3. Is the non-police organisation making efficient and effective use of the PNC?


The organisations inspected as part of the programme included:

► Children and Family Court Advisory and Support Service (Cafcass)

► Environment Agency

► Financial Conduct Authority

► Gangmasters Licensing Authority

► NATS (an air traffic control provider)

► Natural Resources Wales

► Post Office

► Royal Mail

► Scottish Society for the Prevention of Cruelty to Animals

► Thurrock Council

The inspection resulted from a recommendation by Sunita Mason in her 2011 review of the criminal records regime in England and Wales where she stated:

“ ... once access has been granted, it is vital to have effective auditing arrangements to check it is being used appropriately and in line with the agreed conditions. HMIC has strong expertise in this area and their audit role should be extended to cover all Police National Computer (PNC) users, with the users agreeing to meet the cost of the audit.”

The Royal Mail Group was specifically selected because of the wide range of access codes which the Group utilises.

Royal Mail Group successfully completed 235 prosecutions in 2013/14.

As a result of the Royal Mail Group audit there were only four minor recommendations included within the report.



Home Secretary addresses Association of Police and Crime Commissioners general meetingFollowing the May elections to elect Police and Crime Commissioner’s in England and Wales the Home Secretary addressed a meeting of the 20 newly elected PCC’s and those who were re-elected. The Home Secretary’s message was consistent with the messages which were being given on PCC’S prior to the election. This focuses specifically on the key role that PCC’s will be required to play in the coming round of reforms which the Conservative government have outlined as part of their reform and efficiency agenda. The key driver behind a number of reforms is the concepts of increased accountability and also greater value for money.

The meeting was also the first meeting to be chaired by the new Chief Executive of the Association of Police and Crime Commissioner’s, Nazir Afzal.

Proposals to extend misconduct sanctions for retired officers beyond 12 monthsAs part of the continued government reforms being considered for the police one such area is the possibility of bringing misconduct proceedings against retired officers. In a statement commenting on the possibility of extending this to beyond 12 months of retirement the NPCC and the Association of Chief Police Officers has said that they would welcome the opportunity to work with the government to ensure that any changes to legislation with regards the misconduct of retired officers is both proportionate and as fair as possible.

Speaking of the proposed reforms the National Police Chief’s Councils Lead for Professional Standards, Chief Constable Martin Jelley confirmed support for the Government proposal to allow gross misconduct proceedings to go ahead in the 12 month period after an individual has left the service, preventing them from working within law enforcement if the misconduct is proven. There will be consultation with other police staff association and Government on the amendment to ensure the change in legislation is as fair and proportionate as possible.

Off-Payroll working in the public sector: updateAs noted in the previous briefing (March 2016) changes have been proposed to the way that individuals who are contracted to work for local authorities by another company pay their tax. Currently, the obligation rests with the intermediary company who is responsible for assessing whether their engagements are subject to IR35 and accounting for PAYE and NIC. From 6 April, this responsibility, and the liability for paying the correct tax will be shifted to the public sector body which pays the company.

In order to simplify this and increase the likelihood of compliance, the Government has suggested that workers are automatically considered to fall within the scope of the new rules if there is the right to personal service and the engager decides, or has the right to decide how the work should be done. In addition, for more complex cases, an online tool will be provided to help engagers in determining whether or not IR35 applies to a particular engagement. In practice, this will require local authorities to collect more personal data from workers who have been contracted via an intermediary company.


Annual review of the effectiveness of the Audit CommitteeAs you will be aware, it is regarded as good practice for the Audit Committee to undertake an annual self-assessment of its performance. This will need to consider all of the areas of responsibility set out in the Committee’s terms of reference, including reviewing the work of the external auditor. A fundamental part of this is consideration of the external auditor’s performance.

To assist Committees when making this evaluation, we would draw their attention to the work and publications of the PSAA (Public Sector Audit Appointments Ltd). To promote transparency and encourage a focus on quality, the PSAA publish an ‘annual regulatory compliance and quality report’ for each of the principal audit firms.

PSAA’s most recent ‘annual regulatory compliance and quality report’ for EY relates to 2014/15 and is available at http://www.psaa.co.uk/audit-quality/principal-audits/ernst-young-llp-audit-quality/

The PSAA’s report highlights that its audit quality checks incorporate a range of procedures, including:

► A review of each firm’s latest published annual transparency reports

► The results of reviewing a sample of each firm’s internal audit quality monitoring reviews

► The results of the PSAA’s external inspection of EY by the Financial Reporting Council’s Audit Quality Review team (AQRT) covering both financial statements and VFM work

► The results of each firm’s compliance with key performance indicators

► A review of each firm’s client satisfaction surveys

The PSAA report highlights that in 2014/15 EY achieved the highest overall quality rating of ‘green’ for both audit quality and client satisfaction.

We would invite you to review the report in more detail. Should you have any questions, or wish to discuss your review of our effectiveness with us; your local audit teams will be happy to help you.

Whole of Government Accounts (2014/15)The National Audit Office (NAO) has issued a report on the state of the Whole of Government Accounts (WGA) which was released in May 2016. Covering the financial year 2014–15, the annual accounts show that net expenditure has grown from £145.7bn to £152bn. This is in contrast to the government’s own fiscal measure, as reported in the National Accounts, which states the deficit as having decreased from £71bn to £57bn.

The increase in net expenditure has been attributed to the decommissioning in the oil, gas and nuclear fields, increases in net interest on pension scheme liabilities and the impact of the triple lock policy on state pensions.

Government expenditure on wages experienced a small increase, from £148.2bn to £148.3bn, in spite of government job losses totalling 20,346. The government also experienced a slight increase in revenue from £652.9bn to £659.3bn, largely attributable to the increases in value added tax.

It should be noted however, that the NAO signalled there were shortfalls in the reporting from a number of departments and organisations.

Accounting, auditing and governance

http://www.psaa.co.uk/audit-quality/principal-audits/ernst-young-llp-audit-quality/




Key questions for the Audit Committee

What questions should the Audit Committee ask itself?

What actions are being taken to consider the impact of the UK’s decision to leave the European Union?

What impact will the recent Police and Crime Commissioner elections have on the local Police and Crime Plan and also Medium Term Financial Plan? Has the Force recognised any stress arising from these within the Strategic Risk Register?

Are we as an Audit Committee being kept fully informed of progress locally against some of the proposed new requirements of the PCC as a result of the introduction of the Policing and Crime Plan? Are we also seeing some of these new requirements feature on local risk registers?

Have we considered the increase in personal data collection which we will be responsible for as a result of changes to off-payroll working?

Have we completed an annual self-assessment?


Find out more

EU Referendum

For more news about the EU referendum result and its implications: http://www.ey.com/UK/en/Issues/Business-environment/EU-Referendum

Policing and Crime Bill

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/499172/Factsheet_Overview.pdf

HMIC Inspection Regime — National Police Computer

http://www.justiceinspectorates.gov.uk/hmic/our-work/police-national-computer-inspections/

Home Secretary addresses PCCs

http://www.apccs.police.uk/press_release/home-secretary-addresses-association-police-crime-commissioners-general-meeting/

Misconduct sanctions

http://news.npcc.police.uk/releases/well-engage-with-government-about-proposals-to-extend-misconduct-sanctions-for-retired-officers-beyond-12-months

Off-Payroll working in the public sector: update

See the full EY report at: http://www.ey.com/Publication/vwLUAssets/EY-tax-news-2016-05-31-07/$FILE/EY-tax-news-2016-05-31-07.pdf

Annual review of the effectiveness of the Audit Committee


Whole of Government Accounts (2014/15)

See the NAO’s analysis of the Whole of Government Accounts at: https://www.nao.org.uk/highlights/whole-of-government-accounts/

http://www.ey.com/UK/en/Issues/Business-environment/EU-Referendum

http://www.ey.com/UK/en/Issues/Business-environment/EU-Referendum











http://www.ey.com/Publication/vwLUAssets/EY-tax-news-2016-05-31-07/$FILE/EY-tax-news-2016-05-31-07.pdf





https://www.nao.org.uk/highlights/whole-of-government-accounts/

https://www.nao.org.uk/highlights/whole-of-government-accounts/

About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

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Information in this publication is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. Ernst & Young LLP accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material.

ey.com/uk

EY | Assurance | Tax | Transactions | Advisory

KENT POLICE AND CRIME COMMISSIONER

AND KENT POLICE

Internal Audit Progress Report

Presented at the Joint Audit Committee meeting of:

26 September 2016

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.

Kent Police and Crime Commissioner and Kent Police | Internal audit progress report | 1

CONTENTS 1 Introduction ................................................................................................................................................................... 2

2 Summary of progress to date ....................................................................................................................................... 3

3 Other matters ............................................................................................................................................................... 8

Appendix B: Key Findings from Internal Audit Work (High and Medium priority management actions only) ................. 10

For further information contact ........................................................................................................................................ 23

As a practising member firm of the Institute of Chartered Accountants in England and Wales (ICAEW), we are subject to its ethical and other professional requirements which are detailed at http://www.icaew.com/en/members/regulations-standards-and-guidance. 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. Recommendations for improvements should be assessed by you for their full impact before they are implemented. 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. This report is supplied on the understanding that it is solely for the use of the persons to whom it is addressed and for the purposes set out herein. Our work has been undertaken solely to prepare this report and state those matters that we have agreed to state to them. 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 party other than the Board which obtains access to this report or a copy and chooses to rely on this report (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 our Client 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. We have no responsibility to update this report for events and circumstances occurring after the date of this report.

RSM Risk Assurance Services LLP is a limited liability partnership registered in England and Wales no. OC389499 at 6th floor, 25

Farringdon Street, London EC4A 4AB.


The Internal Audit Plan for 2016/17 was approved by the Joint Audit Committee on 15 March 2016. This report

provides a summary update on progress against that plan and the finalisation of the 2015/16 plan.

We have finalised three reports relating to the 2015/16 plan since the previous meeting and this concludes the

2015/16 plan.

We have also finalised three reports from the 2016/17 plan and issued a further two reports in draft.

The rest of this report summarises the results of our work to date and the chart below provides an update on current

progress with the 2016/17 plan:

12% 8% 15% 65%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1

Assignments Complete Assignments in Draft Assignments in Progress Assignments Not Yet Due

1 INTRODUCTION


2 SUMMARY OF PROGRESS TO DATE

Reports shown in bold are presented at this meeting. Executive summaries and action plans from the final reports are appended to the bottom of this progress report.

2015/16 Internal Audit Plan – remaining audits only

2016/17 Internal Audit Plan

Assignment area Timing per

approved IA

plan

Target JAC

per IA Plan

Fieldwork

date/status

Status Draft report

issued

Final report

issued

Opinion Actions

H M L

OPCC New Term of Police and

Crime Commissioner (3.16/17) End Q1 Sept 2016 FINAL 01/08/16 09/09/16

0 0 1

Year-end Accounts Process

(1.16/17) Q1 Sept 2016 FINAL

13/07/16 13/09/16 Advisory 0 2 3

Assignment area Timing per

approved IA

plan

Target JAC

per IA Plan

Fieldwork

date/status

Status Draft report

issued

Final report

issued

Opinion Actions

H M L

Information Security (Joint)

(2.15/16)* Q4 June 2016 FINAL 18/05/16 19/07/16

0 2 0

Workforce Planning – Resources

Management (Joint) (3.15/16)* Q3 March 2016 FINAL 26/05/16 12/07/16

0 0 2

Follow Up (18.15/16) Q4 June 2016 FINAL

06/05/16 13/07/16 Good Progress 0 0 4


Police Pensions Account Coding

Check (4.16/17) Agreed Q1

Agreed Sept

2016 FINAL

03/08/16 13/09/16 Advisory 0 3 1

PCC Assurance over Procurement

(5.16/17) Carried forward from 2015/16 DRAFT 10/08/16

IT Procurement (2.16/17) Q1 Sept 2016 DRAFT

19/07/16

Strategic Fraud Review Carried forward from 2015/16

Scope agreed,

awaiting vetting

clearance to

proceed

Control of Information Assets Q1 Sept 2016 Part 1

complete*

IT Licensing (Joint) Q1 Sept 2016* Audit not

proceeding.

Governance Q2 Sept 2016* 03/11/16

Finance Function Effectiveness

Review Q2 Sept 2016*

Exact scope

and date for this

review still

being agreed.

Payroll Q2 Sept 2016* 04/11/16

Debtors Q3 Dec 2016 Fieldwork in

progress


Absence Management Q2 Dec 2016

Fieldwork

complete, now

in QA

Capital Accounting and Fixed Assets Q2 Dec 2016 14/10/16

Access rights to Networks and IT

Systems Q2 Dec 2016

Scope and date

being agreed

General Ledger Q3 Dec 2016 27/09/16

Treasury Management Q3 Dec 2016 04/10/16

Creditor Payments Q3 Dec 2016 26/10/16

IT Audit - IT Equipment Lifecycles and

Hardware Asset Management Q2/3 March 2017

Scope and date

being agreed*

Follow up Q3 March 2017 Fieldwork in

progress

Delivery of the Capital Programme Q3 March 2017 11/10/16

Pay Progression arrangements (Joint) Q3 March 2017 28/11/16


Expenses and Allowances Q4 March 2017 06/12/16

Commissioning Strategy Q4 March 2017 03/01/17

Restorative Justice Q4 June 2017 09/01/17

Athena – Post-implementation review Q4 June 2017 TBC

* Please note change from agreed plan, see details below.


Key

Audit is planned to start in line with timing per approved plan, or revised agreed

timing as noted in Section 4.1; or

Audit is in progress or draft report has been issued, and report will be presented to

target Joint Audit Committee

Draft report has been issued but responses have not been received/agreed and

report will not be presented to target Joint Audit Committee

Audit has been delayed against timing per approved plan (but resources have been

allocated and audit is either delivered, or planned).

Audit Postponed at Management Request


3 OTHER MATTERS

3.1 Changes to the 2016/17 audit plan

Since the last Joint Audit Committee there have been the following changes to the plan:

The following changes were previously reported.

Auditable area Reason for change

Governance The agreed date for the fieldwork is slightly later than the indicative date

per the IA plan. The report will therefore be presented to the December

JAC instead of September.

Payroll Due to the changes occurring in the Business Centre we were asked to

delay this audit to later in Q3. This will now be reported to the March JAC.

Finance Function Effectiveness Review Review was originally scheduled incorrectly as it requires input from key

individuals within the Finance Team who were prioritising year end

accounts work.

IT Licensing Management have requested specific support in this area from a specialist

external provider and our audit is therefore no longer relevant. We are in

the process of agreeing the scope of a Joint Contract Management review

and will use this resource towards that review.

3.2 Added value work

We have issued the following since the last Joint Audit & Risk Committee:

Auditable area Reason for change

Control of Information Assets Due to the forthcoming visit from the Information Commissioner, management

have requested that we delay the part of the scope relating to hard copy

information. The fieldwork relating to electronic information has been

completed and an interim debrief will be held.

IT Audit Due to the Information Commissioner’s visit, we have also at the request of

management moved this audit back to January 2017. The report will still be

presented to the March JAC.


Police – Benchmarking of Internal Audit Findings 2015/16

As part of our internal audit service, we provide benchmarking data to our clients within our internal audit assignment reports. This briefing provides a benchmark for our

individual clients to self-assess themselves against all of our police clients in terms of the numbers of actions agreed, and the assurance opinions provided in similar audits

performed across the sector.

Emergency Services New Briefing – September

Published on 12 September, this included briefings on the following topics:

- Police numbers and crime figures

- Proceeds of crime

- Police diversity

- Hate crime action plan

- What next for Fire reform?

- Fire and rescue national framework

- Joint Emergency Services Interoperability Principles

- Policing and Crime Bill update.


Assignment: Information Security (Joint) (2.15/16)

Opinion:

H - 0

M - 2

L – 0

The key findings from this review are as follows:

Design of the control Framework

The following controls were found to have been designed adequately regarding the organisations’ information security arrangements:

The information security governance structures in place across the two Forces adhere closely to recommended government guidelines regarding

information governance arrangements, reducing the risk of lack of adequate strategic direction for and oversight of the information security process, as well

as senior accountability.

Information security roles and responsibilities for the two Forces have been documented according to government guidelines and made available to the

individuals across the two Forces responsible for information security matters. This reduces the following risks:

Lack of compliance with government information security management best practice standards.

That the individuals concerned will misunderstand their roles and will not carry out their information assurance duties accordingly. This could lead in

turn to key security operations being undertaken incompletely or incorrectly and increased data security/confidentiality breaches.

A wide range of joint Information Security/Management and Acceptable Use policies and procedures have been developed, documented and made

available to staff across the two Forces via their shared intranet sites, with further joint guidance documents planned to be issued in the near future. This

reduces the risk that staff will be unaware of management's intentions regarding the protection of data from unauthorised access, loss or misuse and their

own role in using Force equipment and systems in ways which minimise such threats.

In Essex and Kent Police, new users are required to successfully complete a range of mandatory online training courses on information security before

they are permitted to access the Forces’ network. In addition, in Essex Police, staff are required to undertake as series of online refresher courses on

information security, on an annual basis. Compliance with these requirements is monitored and followed up where necessary by management. This

reduces the risk of staff being unaware of key information security risks and of their roles and responsibilities in protecting information, which in turn could

lead to an increased likelihood of security and confidentiality breaches, which could result in reputational damage and potentially legal action and financial

penalties.

APPENDIX B: KEY FINDINGS FROM INTERNAL AUDIT WORK (HIGH AND

MEDIUM PRIORITY MANAGEMENT ACTIONS ONLY)


A number of information risk management measures have been developed and implemented in the two Forces, including the use of Force Risk Registers,

Information Asset Registers, standard information risk assessment templates for new/changing systems, and a standard Risk Appetites methodology to be

used by Information Asset Owners. These processes have been designed to reduce the risk that information security risks for all key information assets

used by the Forces' business and support teams are not assessed and, where appropriate, mitigated in a timely manner, which could lead to information

security/confidentiality breaches, or the loss or misuse or personal or business critical information.

Kent and Essex Police maintain a formal record of information security incidents for the purposes of reporting to the Home Office (in line with mandatory

National Incident reporting arrangements) and to the Force Security and Integrity Committee (in Kent) and the Information Management Board . Information

reported using this recording system operated by the two Forces includes the date of the incident, the incident type (e.g. unauthorised disclosure), incident

details, risk category pre- and post- mitigation (based on a Red, Amber, Green scale) and the mitigation measures taken.

This reduces the risk for both Forces that particular weaknesses in control which may have led to the incident, or trends in unauthorised activity indicating

examples of unauthorised access or system misuse targeted against particular business processes or groups will not be highlighted for management's

attention and consideration of remedial action. They also provide positive assurance regarding the way in which information security incidents are

addressed by each Force and what remedial action has been taken or is planned to prevent a reoccurrence.

The processes for the remediation of information security risks by the two Forces, including the production of the Residual Risk Statement and Risk

Remediation Plan, were found to have been designed adequately. They reduce the risk that the terms of the Forces' accreditation in respect of its PSN

have not been met, which could lead to the withdrawal of the accreditation and permission for the PSN connection which could have a significant impact

on the security and efficiency of business operations for which such a connection is required.

The Information Security Officers for Kent and Essex Police act as internal accreditors for new information systems or changes to existing systems. To

assist them in their accreditation assessment process, they use a Security Accreditation Strategy template containing a number of predefined questions

about the system being submitted for assessment. This process and the use of the standard template reduces the risk that new systems or changes to

existing systems will be developed and implemented which are insecure and vulnerable to access or misuse by unauthorised persons, which could in turn

result in breaches of information confidentiality and loss of data integrity and availability.

However, the following control was found not to have been designed adequately, which has resulted in one Medium Priority management action:

Unlike Essex Police, at the time of our review, Kent Police were not required to undertake refresher training on information security on an annual basis.

We were advised and confirmed that an action point had recently been documented in the Force’s Corporate Risk Register stating that annual refresher

training would be implemented as from 1 July 2016.

In the absence of a mandatory requirement for existing staff to undertake regular information security training courses, there is an increased risk that staff

will fail to remain aware of the latest developments and threats to the security of information handled in the course of their business, and their role in

protecting the Force against them. Examples of the negative impacts resulting from this increased risk could include breaches of confidentiality and losses

of information integrity and availability. This in turn could lead to breaches of relevant legislation, such as the Data Protection Act, as well as negative

financial consequences for the Force.

Application of and Compliance with the Control Framework

During our testing, we identified one significant issue which we wish to bring to management’s attention and for which we have agreed a medium priority


management action, as follows:

A number of risk mitigation actions had been documented in the Forces’ joint Remediation Plan, the completion of which is required as a proviso of the

PSN Accreditation, granted in July 2015. For Information Risk Management, the specific actions identified were:

Ensure that information is not being collected and/or retained in contravention of MoPI (Management of Police Information) policy and statutory

requirements.

A baseline physical security assessment of the entire police estate needs to be completed.

Review third party service delivery and ensure that agreements meet security requirements and are adequately monitored.

Produce a Records Management strategy and policy.

Legacy systems to be statemented.

However, at the time of our review, the above actions had not been completed. As well as increasing the risk of non-compliance with the PSN Accreditation

process, this also increases the risk that the control weaknesses highlighted in the above plans could be exploited and result in information security and

confidentiality breaches and loss of data integrity and availability.

Otherwise, our testing identified that the recurring controls identified and evaluated during this audit were generally operating and being complied with; in

particular:

We obtained and reviewed the Action Points Matrices produced following Essex Police Information Management Board meetings held in July, October and

December 2015 and Decisions and Actions from July and September 2015 from the Kent Force Security and Integrity Committee meetings (the December

reports were not available at the time of our fieldwork). We confirmed that key information security issues had been recorded and implementation of agreed

actions tracked and monitored, as planned.

We obtained a report on NCALT (the police’s National Centre for Applied Learning Technologies) Information Security training by Essex Police officers and

staff during 2015.and confirmed that the report showed that 96% of all employees had successfully undertaken the training. We also confirmed that the

identity of all staff who had not yet completed the course had been reported and highlighted for follow up action.

We obtained and reviewed a copy of the ‘Slow Time’ i.e. incidents with only a ‘local impact. Security Incident reports produced by Kent and Essex Police for

National and FSIC/Information Management Board reporting purposes for Q3 2015-16. We confirmed that incidents had been recorded in the report using the

standard headings (as listed in the control design section above), For Kent Police, 16 incidents were recorded covering a number of incident types, the most

common incidents occurring within the ‘unauthorised disclosure’ (2); ‘physical security’ and ‘unauthorised persons on premises’ categories. For Essex Police In

each case, the report showed that the original risk highlighted by the incident had been reduced, through appropriate mitigation action to either a ‘Green’ or

‘Amber’ level, and in the latter case that action required to reduce the risk still further had been specified.


Ref Findings Summary

Management Action

Priority Implementation Date Manager

Responsible

1.4

Management will implement mandatory information security refresher training for all

existing staff on an annual basis.

Management comment

This will be an information management / corporate policy decision, but in addition to

this a recommendation was put forward from the Information Management board that

new starters be able to access the IT Security training via the public section of NCALT.

This was to be progressed by the ISO in order to further re-enforce internal IT security

briefings following a member of staff start date – this is for Essex specifically, but the

ISO was to discuss with their Kent counterpart as joint initiative.

Medium

End of October 2016

31/10/2016

Information

Security Manager,

Kent Police

Paul Loft


1.7 Management will ensure that the actions regarding the Information Risk Management

regime documented in the Cyber Risk Reduction Plan are implemented over the

course of the next two years, as outlined in the 2016 PSN Risk Remediation Plan

signed off by both Force SIROs and being presented to the PSN National Accreditor.

Management comment

The Risk reduction plan has been further developed since this review and has been

designed to feed directly in to the Residual risk statement showing / quantifying

progress to date and reduction over time going forward. The method has been signed

off at board level and is now being followed. Actions and changes are taking place

each week (technical, process and procedural) to reduce risks. There is also a direct

link with strategic/longer term projects and programmes of work where the Risk

reduction themes are linked to the FIM (Fast track Infrastructure Modernisation)

showing how each work stream has to contribute to the risk reduction and the

reporting regime. All of this is in place and being followed now.

Medium Q2 2016-17 -

Q4 2017/18

31.03.2018

Management comment

Further to the landscape

review of Kent Police

and Essex Police IT in

late 2014 (by Methods

and Masons Advisory),

a large number of

recommendations were

raised in relation to the

complex and ageing

technical architecture

across both forces. A

subsequent £8.4

million investment

programme to address

this was agreed by both

PCCs in the summer of

2015, on the

understanding that this

was a major programme

of work with an

anticipated duration at

that time of 4 years –

the programme has now

been re-baselined to

achieve the main

recommendations by

April 2019. Due to the

scale of the work, it is

not practical to set an

earlier completion date

without significantly

more expenditure.

Information

Security Managers,

Essex and Kent

Police (to co-

ordinate).

Paul Loft


Assignment: Workforce Planning – Resources Management (Joint) (3.15/16)

Opinion:

H - 0

M - 0

L – 2


Intakes of Student Constables are planned for the current year and following two years. These are kept under regular review and intake levels adjusted to bring

Police Officer strength in line with target establishment over the three year period. This is monitored using the Police Strength Projection reports (Kent) which

give totals of officers in comparison to actual and target establishment, and the SHARP (Strategic Human Resources Process) packs (Essex) which give totals

of officers per command and rank as well as overall total, in comparison to actual and target establishment. Target establishment is as set by Strategic Change

(Essex) and Corporate Services (Kent).

The Resourcing Deployment Panel meets monthly to consider resourcing issues for commands and allocate Police Officers to maintain levels of priority

functions and equitable distribution of resources or vacancies across non-priority commands. This is governed by terms of reference and a decision flowchart.

Membership includes senior officers from command teams and representatives of the Police Federation, Recruitment and Planning, Resource Planning and

HR Organisational Management. The standard data pack provided to the Panel shows total officers broken down by command, known and proposed changes,

and impact factors such as long-term sickness absence. Student Constable numbers are given separately from effective Police Officers.

It is the responsibility of Commands to anticipate and manage the recruitment of officers for training in specialist skills such as Firearms Officers through

internal advertising. The Resourcing Deployment Panel decides on actual appointments of successful applicants to vacancies.

There is a monthly process to consider whether a Promotion Board is required. This is reviewed by the HR Planning Team, HR Organisational Management

Team and the HR People Development Team, on the basis of a standard Promotion Board Report. This gives details of the strength and establishment for

each rank projected at intervals to the end of the following financial year. Predicted leavers and officers who have the option to retire are accounted for.

The Resourcing Deployment Panel decides which vacancies will be filled from available pools, with a view to delivering Chief Officer priorities and distribute

resources or vacancies equitably.

Decisions to recruit, whether for adjustments to planned Student Constable intakes or other posts, are taken only with approval of Finance and Learning &

Development.

There has been no formal review of resourcing implications of PCC Police and Crime Plans. However the Chief Constables’ priorities are developed and

reviewed in discussions and performance reviews with the Police and Crime Commissioners and delivery is directed and monitored through Chief Officer

Strategic Meetings (Kent), Chief Officers Management Group (Essex) and the Resourcing Deployment Panel. The OPCC’s are represented on the Strategic

Change Board which considers business cases to deliver savings. In addition the Essex PCC prior to the May 2016 election, held a quarterly Resourcing

Scrutiny Meeting, which was provided with a narrative report and tables of resourcing data.


Recruitment and changes to establishment are managed using Operational Management data products showing alignment of Police Officer strength compared

to actual and target establishment. Budget is based on establishment.

A Risk Register is maintained for People Risks which include five risks relating directly to workforce planning. Each risk is recorded in a summary as well as in

the register. This records review dates and any actions, and all five risks were recorded as having been reviewed quarterly. Issues relating to resourcing are

also raised and recorded for continuing review at the Resourcing Deployment Panels.

There is a policy for Police Officer Postings providing principles and a process for the posting of Police Officers to roles.

The data products used for reviews and decisions are created by Organisational Management. Strength and establishment figures are taken from SAP.

Leavers are predicted using known leavers and retirements plus projections based on previous levels. Quality Assurance is carried out for all report products

based on a risk assessment. SAP workforce data is subject to daily checking, to ensure any changes are as expected, as well as a monthly audit process.

Ref Findings Summary

Management Action

Priority Implementation

Date

Manager Responsible

No High or Medium priority management actions were agreed as part of this audit


Assignment: Follow Up (18.15/16)

Opinion:

H - 0

M - 0

L – 4

Good Progress

Taking account of the issues identified in the remainder of the report and in line with our definitions set out in Appendix A, in our opinion Kent Police and Crime

Commissioner and Kent Police has demonstrated good progress in implementing agreed management actions.

The review has identified four low priority management actions that require further management attention. We have revised management actions where

appropriate and reassessed the level of risk to the Force; these are detailed in Section 2 of this report.

Ref Findings Summary Management Action Priority Implementation

Date

Manager Responsible


2016/17 PLAN

Assignment: OPCC – New Term of Police and Crime Commissioner (3.16/17)

Opinion:

H - 0

M - 0

L – 1


An initial candidate briefing pack was prepared and presented to candidates on 13 April 2016, and made available on the Kent Police and Crime

Commissioner’s website. The briefing included key financial and operational information, including the benefits currently achieved and costs to allow

the prospective PCC to make decisions on whether or not to continue current arrangements if successfully elected. Key topics included the PCC

statutory responsibilities, PCC spend and funding for 2016/17, an overview of Force Directorates, including Force mission and values, emerging

policing issues, commissioning, public engagement, collaboration, partnerships, and staff costs.

We also reviewed the candidate briefing pack presented on the 13th April 2016, the PCC strategic briefing pack and the financial briefing pack which

was provided to the PCC on commencing his role. We found they contained adequate information to allow the prospective PCC to make decisions on

current arrangements such as:

Force structure chart and Chief Officer biographies ;

PEEL police effectiveness, efficiency and legitimacy inspection reports 2015;

List of corporate meetings, frequency of meetings and Terms of Reference for each forum;


Her Majesty’s Chief Inspector of Constabulary Annual Assessment of Policing report;

Kent Police Performance Management Committee current KPI data for the Force;

Kent Police’s Collaboration Narrative Report by the Chief Constable which contains an evidence based record that acts as a record of all

Kent Polices collaboration work since the inception of the relationship with Essex in 2007.

Current budget spend and income;

Medium Term Financial Plan and Capital Plan;

Commissioning - scale, approach and planned allocations;

Breakdown of PCC budget and reserves;

Budget process: manifesto led linked to Police and Crime Plan;

Key risks presented to the Joint Audit Committee;

Financial Regulations including contracts.

We reviewed a print out from the PCC’s Microsoft outlook diary since commencing post on 12 May to 17 July 2016 from the Executive Assistant. We

found the PCC had attended a range of meetings with key staff on a daily basis for verbal briefings as part of his new role. We also reviewed the

minutes and agenda from the Essex and Kent PCC Collaboration Board meeting held on the 6 June 2016 and found the new PCC was in attendance

and the meeting included a presentation on the future working relationship in the collaboration by the Chief Constables and other key performance

reporting from varying Force Directorates such as the Serious Crime and Support Services.

The new PCC must review and sign off key governance documents and policies on commencement of the post. The following key PCC governance

documents were reviewed and we found that they were signed off by the PCC on his first day of service on 12 May 2016:

Commissioner’s Declaration of Acceptance;

Letter from Chief of Staff to Commissioner with agreement of personal statutory and/or necessary governance requirements;

Commissioner’s Register of Interests;

Commissioner’s Code of Conduct;

Commissioner’s Ethical Checklist for the Committee on Standards in Public Life;

Official Secrets Act;

Schemes of Consent Chief of Staff & Chief Finance Officer;

Scheme of Consent: Chief Constable; and

Health and Safety Policy Statement.

The existing Police and Crime Plan on the Kent OPCC website showed the old PCC and had not been updated. We found this cannot be removed until

the Police and Crime Plan is launched in April 2017 as it is a statutory requirement. However, we reviewed the remainder of the Kent OPCC website


and the hyperlink to the Kent PCC twitter page and found that they had been updated to reflect the new PCC in post.

We reviewed OPCC staff email signatures and digital templates for issuing correspondence from the OPCC and found they had been updated to

reflect the new PCC strap line ‘your security is my priority’.

During the audit we spoke to key staff including the Chief of Staff, Force Liaison Officer and the PCC’s Executive Assistant. Through discussion we

found that collectively the new PCC was, and continues to be provided with support by staff through advice, information and briefings and joint

attendance in key meetings.

On review of the current Strategic Risk Register we found it included the risk of the new PCC and delivery of 100 day programme. We also found the

type of risk was defined as ‘Commissioner- organisational and delivery’, a mitigation strategy had been recorded, key issues affecting mitigation were

assessed and recorded, a risk owner was assigned and the OPCC had decided and recorded where their sources of independent assurance would

come from for the risk.

We were advised by the Chief Finance Officer that there was no specific budget for the transition of the new term for the PCC. However, we were

advised by the Chief of Staff that whilst exact transition costs were not known, they were thought to be less than £1,000. The OPCC may want to

consider for future years to record these details separately in the event that an FOI request could be submitted.

We have identified one low priority management action.


Date

Manager Responsible


Assignment: Year-end Accounts Process (1.16/17)

Opinion:

H - 0

M - 2

L – 3

Advisory


In preparation for the earlier statutory sign off date in 2018, Kent Police’s intention is to bring forward the date the accounts are signed off over the next two

years. However, the timing of the audit and a final sign-off date has not yet been agreed with the external auditors (EY).

A task monitoring tracker spreadsheet has been set up to monitor the completion of deliverables required by EY. However, our testing identified that some of

the requirements of the Client Assistance Schedule were not correctly recorded on the internal task monitoring tracker.


Some completed working papers had not yet been reviewed. Whilst we understand that recent annual leave had impacted on the timeliness of this, some

incomplete working papers which had been marked as complete were identified during our review.

Monitoring of progress is less formal than in previous years (due to the perceived good progress being made), but this should be kept under review as the

year-end audit progresses.

Although a tracker has been designed to capture and then monitor information requests from EY during the audit, it needs to be ensured that the information

it contains is complete.


Date

Manager Responsible

2 Some of the requirements of the Client

Assistance Schedule were not correctly

recorded on the internal task monitoring

tracker.

We will review the CAS in detail to ensure

all requirements are included on our tracker.

Medium Implemented Chief Finance Officer

3 Some completed working papers had

not yet been reviewed. Whilst we

understand that recent annual leave

had impacted on the timeliness of this,

some incomplete working papers which

had been marked as complete were

identified during our review.

We will ensure that all completed working

papers are promptly reviewed to identify any

further work required.

Medium Implemented Chief Finance Officer

Assignment: Police Pensions Account Coding Check (4.16/17)

Opinion:

H - 0

M - 3

L – 1

Advisory

From a screen dump of the GL mapping of’ Pensions Inc NT Injury’ (1044) previously provided during our last review we observed that the wage type had

mapped to GL code 812002 Pension Payments. From the wage type/GL mapping report as at 23rd June 2016 provided by the Project Accountant and

exported to Excel we confirmed that the wage type 1044 (‘Pensions Inc NT Injury’) now mapped to GL code 506000 (‘Injury’). We are advised that codes

beginning 500 are normal expenditure codes and not within the pensions account. We were also advised that this coding correction was only undertaken

from 1 April 2016, as it had been agreed that to correct it during the year could have adversely affected how the codes map.

We also obtained evidence that the previously identified Ill Health Pensions miscoding had been similarly corrected and from 1 April 2016 was included


within the Pensions Account.

From a download from SAP we identified a total of 10 journals which had been put through the GL after the year end. We investigated these to confirm that

the journals were necessary and were not being put through in situations where automatic coding could have been used. We identified that:

- Three journals related to the manual calculation used to adjust the difference between actual contributions and 24.2%. As this is a manual

calculation, the journal is required.

- One journal related to salary advances for commutations. Commutations may be paid outside payroll if someone is leaving and Payroll cannot

run the payment in time. At the year-end there is an adjustment so the correct 12 months shows in the ledger. This therefore needs to be done

by journal.

- A journal was put through to move the Ill Health Lump Sum from 810003 to the Ill health Capital Equivalent in 506100 where it should sit. The

Financial Controller explained that all retirees qualifying under the ill health retirement currently get paid through the Pension Payments GL

812002. This means the retiring officer receives their commutation as normal and the Force bears a capital equivalent charge which is twice

their pensionable pay. This becomes a cost to the Force and reduces the amount receivable from the top up grant. This cost is credited to GL

810003 reducing the pension payments and debited to GL 506100. Therefore this cost cannot be directly mapped to GL 506100 through the

wage type and a journal is required.

- One journal deducted from his commutation the leased car that a retiree had purchased.

- One journal was to move an invoice to Redundancy Payments that had incorrectly been coded to a pensions GL code.

- One journal was the Injury Increase journal (correcting known coding error).

- One journal was the Ill Health Pensions journal (correcting known coding error)

- One journal was a one-off adjustment for GAD v Milne.

There were therefore valid reasons for all journals.

We reviewed the list of GL codes which had been included in the grant claim for 2015/16 and confirmed that there was a reasonable explanation why each

had been included (with the exception of £10k which the Project Accountant had already identified had been included in the claim in error – see Control 1.4

in Section 3 below).


Date

Manager Responsible

1.1 The Project Accountant reviews a

mapping spreadsheet on a regular

basis, but this is not built into a regular

schedule for review.

We will ensure that the payroll/GL mapping

control spreadsheet is regularly reviewed

and balanced so that new wage types or

changes in coding are picked up and

confirmed as correct.

Medium 31/12/16 Dennis Langham


1.2 There is no internal written procedure

for the preparation of the Home Office

grant claim.

We will prepare a procedure document

which details how the Home Office Top Up

Grant claim is prepared and the steps which

need to be taken to ensure it is correct.

We will also ensure that this includes

processes during the year (i.e. the mapping

control).


1.3 Within the GL pensions account codes

begin 8000 and ordinary expenditure

codes begin 500.

However in addition to the Pensions

Injury Increase miscoding a number of

other anomalies have been identified by

the Project Accountant where 8000

codes should not be included or 500

codes need to be.

We will further review the payroll/GL

mapping and correct codes so that all codes

within the 8000s relate to police pensions.

We will also make sure that it is clear within

our written procedure which 500 codes

need to be included within the Home Office

claim.

We will consider whether, when new wage

types are set up on the Payroll system,

Finance should be consulted with regard to

the appropriate GL code for it to go to.

We will ensure that adequate and accurate

descriptions are given to both new wage

types and GL codes and that any known

anomalies are corrected.


Dan Harris

[email protected]

07792 948767

FOR FURTHER INFORMATION CONTACT

mailto:[email protected]

Support Services Directorate, Kent Police Headquarters, Sutton Road, Maidstone, Kent ME15 9BZTel: 01622 652501 Fax: 01622 2009

Email: [email protected]

www.essex.police.uk www.kent.police.uk

Summary report for Kent Police Audit Committee on Internal Audit Recommendations

Author: L. Bishop Owner: Support Services Directorate Development Team

Date: September 2016 V.2

Item 8

Section 1: Upcoming Audits

Audit Scheduled for

Audit Report County

TBC Finance Function Effectiveness Review Kent

30/08/2016 Absence Management Kent 30/08/2016 Follow Up Kent 12/09/2016 Governance Kent 14/09/2016 Debtors Kent Q2/3 TBC IT Audit Kent 04/10/2016 Treasury Management Kent 11/10/2016 Delivery of the Capital Programme Kent 14/10/2016 Capital Accounting and Fixed Assets Kent 14/10/2016 General Ledger Kent 28/10/2016 Creditor Payments Kent 04/11/2016 Payroll Kent 28/11/2016 Pay progression (Joint) Kent

Section 2: Closed Audit Recommendations

These actions have been scrutinised and authorised for archive by the Force CFO. They are shown here for Audit Committee sign off and are as follows:

Report Name Date of Report

No of Closed Actions

Recommendation Ref:

Capital Accounting and Fixed Assets 18/09/2015 1 4.1


Staff and Contractor Vetting 08/09/2014 1 2.2

Follow Up Kent – 2013/14 17/07/2014 1 3.3.6

Risk Maturity 27/04/2016 2 1.2.2.2a, 1.2.2.2b

Workforce Planning Resources Mgmt 12/07/2016 2 1.14, 1.15

Cash Banking and Treasury Mgmt 18/01/2016 1 1.2

Creditors 18/09/2015 2 1.1, 4.1

Follow Up Kent – 2015/16 26/10/2015 4 1.1,1.2, 3.2, 3.4.1

Creditors 20/11/2014 1 6.1a

Leavers and Movers 07/09/2015 1 1.1

Section 3: Audits Awaiting Draft Report or in Draft Status


Strategic Fraud Review

Control of Information Assets

New Term of PCC

Section 4: Audit Summary

The attached summary sheet shows all reports outstanding for Kent Police. This summary report shows the total amount of high, medium and low recommendations set per report, how many have been implemented and closed and how many remain outstanding or are awaiting implementation. Recommendations outside of their due date

are stated in the last column and detailed updates follow in Section 5.

Summary:

H M L High Med Low High Med Low High Med Low

01/08/2016 - 02/09/2016Financial

YearAudit Report Title County

DRAFT /

FINALDate Issued Owner

Total

Recommendations

Completed

Recommendations

Recommendations

Outstanding

Recommendations

Outside of Due Date

DRAFT

2016/17 Police Pensions Account Coding Check Kent DRAFT 03/08/2016 Paul Curtis SEN T SPON SOR 0 3 / 0 8 / 16

2016/17 IT Procurement Kent DRAFT 19/07/2016 Dave Edwards SEN T SPON SOR 2 0 / 0 7/ 16

2016/17 Year End Accounts Process Kent DRAFT 14/07/2016 Sean Nolan SEN T SPON SOR 14 / 0 7/ 16

2016/17 New term of the PCC Kent DRAFT 01/08/2016 Sean Nolan SEN T SPON SOR 0 1/ 0 8 / 16

2014/15 2014/15 Follow Up Kent Kent Final 17/04/2014 Various 5 3 4 2 0 1 1 1 1

DRAFT

2015/16

2015/16 Leavers and Movers Kent Final 07/09/2015 Business Services 1 2 0 1 1 1 0 1 1

2015/16 Seized Property Kent Final 19/08/2015 Dave Marshall 1 1 4 1 4 0 1 0 1

2015/16 Creditors Kent Final 18/09/2015 Finance 1 3 1 3 FINALISED 25/07/16

2015/16 Payroll Kent Final 11/11/2015 Finance 3 1 3 1 FINALISED 03/08/16

2015/16 Cash Banking and Treasury Management Kent Final 17/12/2015 Paul Curtis 3 3 FINALISED 25/07/16

2015/16 ANPR Contract Management Joint Final 02/02/2016 Dave Edwards 3 1 1 1 1 2 1 0 2 1

2015/16 Complaints Kent Final 23/02/2016 Sean Nolan 1 2 1 2 FINALISED 20/06/16

2015/16 Debt Collection and Recovery Kent Final 07/03/2016 Paul Curtis 1 1 FINALISED 25/07/16

2015/16 Collaboration - Costs and Benefits Joint Final 24/03/2016 Mark Gilmartin 2 1 1 0 2 0

2015/16 Force Control Room Business Continuity Kent Final 30/03/2016 Jules Donald 1 1 1 1 0 1 1

2015/16 Risk Maturity Kent Final 27/04/2016 Louisa Neiles 3 2 2 0 1 2 1

2015/16 Victims Commissioning Kent Final 06/05/2016 Claire Gatward 3 3 FINALISED 03/06/16

2015/16 Cyber Security Kent Final 17/05/2016 Jules Donald 1 0 1 0

2015/16

2016/17

2016/17 Workforce Planning - Resources Mgmt Joint Final 12/07/2016 Richard Leicester 2 2 FINALISED 02/09/16

2016/17 Follow Up (Kent) Kent Final 13/07/2016 Paul Curtis 4 0 0 4

2016/17 Information Security Joint Final 19/07/2016 Jules Donald 2 0 2 0

7 25 27 3 14 20 4 11 7 4 5 2

59 37

2016/17

TOTALS22 11

Section 5: Reports and Recommendations Outside of Due Dates

Financial Year 2016/17 High recommendations = 0 Medium recommendations = 0 Low recommendations = 0

Total reports with recommendations outside of their due date = 0



Leavers and Movers – 07/09/2015: High=1 Med=1 High - Recovery of Warrant cards and ID cards

Update: The Line Manager Checklist is generated automatically on completion of the leaving action; the circulation of the checklist is informative and instructs the manager in the methods of disposal required for Warrant and ID cards. In addition weekly/daily reports are produced to notify key stakeholders of leaving dates, of which a key action resulting from this is to remove access to buildings and systems as part of the process to invalidate the card.

Medium – Line Manager Checklist


Seized Property – 19/08/2015: Med=1 Medium – Property Retention/Disposal

Update: There have been a number of complications and delays with finalising the draft policy, though it is nearly complete. Specific operations and findings from these have altered the approach on some of the relevant issues and have necessitated additional time and re-drafting. A final draft is almost ready to be put to consultation. Allowing for this delay and the time required to consult, can the deadline be revised to reflect this, to 31/12/16.That is a more accurate reflection of the work it has transpired has been required to properly respond to the findings of the audit as well as emerging operational issues.

ANPR Contract Management – 02/02/2016 : High=2 Med=1 - PROCUREMENT High - Signed contracts obtained for all contracts entered into

Update: It would appear that there is no contract available, therefore Bernice Milton, Deputy Head of Procurement, has requested that Barry Rimmer, the Category Manager, gets one put into place within the next four weeks. This contract is underpinned by a CCS Framework, however, we must ensure that we have a signed cool off contract on our records. Expected completion date 19th July.

High - Most appropriate contract manager for ANPR

Update: We have now entered into a structure where SMT would take this request forward. Request for work would be submitted, considered and assigned to an appropriate contract manager. SMT meet weekly to discuss and assign workload for each category manager.

Medium - Identify key risks Update: The Contract Management Module has been ordered – this will be part of the solution which is due for delivery in August/September with full utilisation by end of September.

FCR – Business Continuity – 30/03/2016 : High=1 Med=1 High - No overarching, documented IT disaster recovery plans were found to be in place relating

to the Kent FCR infrastructure systems and data. Update : The testing of IT BC/DR plans is not something that can be undertaken without involvement of the relevant IAO’s or business leads. Once the full detailed documentation as per 1.2 has been completed and reviewed, a process of practical testing will be discussed with IAO’s and/or business leads. This should start first quarter 2017.

Medium - testing the operation of all phases of its business continuity plans for the FCR. Update : Agreed by Crime and Incident Response with an implementation date of 15th April 2016 and action owner being Andy Mahoney, FCR Systems, Change and Air Support Manager.

Risk Maturity – 27/04/2016 : Low=1 Low - Central library of guidance to assist in succession planning.

Update : Awaiting update from Action owner – Implementation date of 31/06/16.


Total reports with recommendations outside of their due date = 1 Follow Up 17/04/14 : Med=1 Low=1 Medium - Estate Strategy

Update : Revision to policing model will occur by mid-March with Strategy remaining in abeyance until after PCC election

Low- Planned Maintenance Update: Atkins Ltd have now been commissioned to undertake Building Condition Surveys in both Essex & Kent and will commence surveys in August 2016 with a programme of completion within 12 months.

Support Services Directorate, Kent Police Headquarters, Sutton Road, Maidstone, Kent ME15 9BZ Tel: 01622 652501 Fax: 01622 2009

Email: [email protected]

www.essex.police.uk www.kent.police.uk

Summary report for Kent Police Audit Committee on Internal Audit Recommendations

Author: L. Bishop Owner: Support Services Directorate Development Team

Date: September 2016 V.2

Item 8

mailto:[email protected]

Section 1: Upcoming Audits

Audit Scheduled for

Audit Report County

TBC Finance Function Effectiveness Review Kent

30/08/2016 Absence Management Kent

30/08/2016 Follow Up Kent

12/09/2016 Governance Kent

14/09/2016 Debtors Kent

Q2/3 TBC IT Audit Kent

04/10/2016 Treasury Management Kent

11/10/2016 Delivery of the Capital Programme Kent

14/10/2016 Capital Accounting and Fixed Assets Kent

14/10/2016 General Ledger Kent

28/10/2016 Creditor Payments Kent

04/11/2016 Payroll Kent

28/11/2016 Pay progression (Joint) Kent

Section 2: Closed Audit Recommendations

These actions have been scrutinised and authorised for archive by the Force CFO. They are shown here for Audit Committee sign off and are as follows:


No of Closed Actions

Recommendation Ref:



Staff and Contractor Vetting 08/09/2014 1 2.2

Follow Up Kent – 2013/14 17/07/2014 1 3.3.6

Risk Maturity 27/04/2016 2 1.2.2.2a, 1.2.2.2b

Workforce Planning Resources Mgmt 12/07/2016 2 1.14, 1.15

Cash Banking and Treasury Mgmt 18/01/2016 1 1.2

Creditors 18/09/2015 2 1.1, 4.1

Follow Up Kent – 2015/16 26/10/2015 4 1.1,1.2, 3.2, 3.4.1

Creditors 20/11/2014 1 6.1a

Leavers and Movers 07/09/2015 1 1.1

Section 3: Audits Awaiting Draft Report or in Draft Status


Strategic Fraud Review

Control of Information Assets

New Term of PCC

Section 4: Audit Summary

The attached summary sheet shows all reports outstanding for Kent Police. This summary report shows the total amount of high, medium and low recommendations set per

report, how many have been implemented and closed and how many remain outstanding or are awaiting implementation. Recommendations outside of their due date

are stated in the last column and detailed updates follow in Section 5.

Summary:

H M L High Med Low High Med Low High Med Low

01/08/2016 - 02/09/2016Financial

Year Audit Report Title CountyDRAFT /

FINALDate Issued Owner

Total

Recommendations

Completed

Recommendations

Recommendations

Outstanding

Recommendations

Outside of Due Date

DRAFT

2016/17 Police Pensions Account Coding Check Kent DRAFT 03/08/2016 Paul Curtis SEN T SPON SOR 0 3 / 0 8 / 16

2016/17 IT Procurement Kent DRAFT 19/07/2016 Dave Edwards SEN T SPON SOR 2 0 / 0 7/ 16

2016/17 Year End Accounts Process Kent DRAFT 14/07/2016 Sean Nolan SEN T SPON SOR 14 / 0 7/ 16

2016/17 New term of the PCC Kent DRAFT 01/08/2016 Sean Nolan SEN T SPON SOR 0 1/ 0 8 / 16

2014/15 2014/15 Follow Up Kent Kent Final 17/04/2014 Various 5 3 4 2 0 1 1 1 1

DRAFT

2015/16

2015/16 Leavers and Movers Kent Final 07/09/2015 Business Services 1 2 0 1 1 1 0 1 1

2015/16 Seized Property Kent Final 19/08/2015 Dave Marshall 1 1 4 1 4 0 1 0 1

2015/16 Creditors Kent Final 18/09/2015 Finance 1 3 1 3 FINALISED 25/07/16

2015/16 Payroll Kent Final 11/11/2015 Finance 3 1 3 1 FINALISED 03/08/16

2015/16 Cash Banking and Treasury Management Kent Final 17/12/2015 Paul Curtis 3 3 FINALISED 25/07/16

2015/16 ANPR Contract Management Joint Final 02/02/2016 Dave Edwards 3 1 1 1 1 2 1 0 2 1

2015/16 Complaints Kent Final 23/02/2016 Sean Nolan 1 2 1 2 FINALISED 20/06/16

2015/16 Debt Collection and Recovery Kent Final 07/03/2016 Paul Curtis 1 1 FINALISED 25/07/16

2015/16 Collaboration - Costs and Benefits Joint Final 24/03/2016 Mark Gilmartin 2 1 1 0 2 0

2015/16 Force Control Room Business Continuity Kent Final 30/03/2016 Jules Donald 1 1 1 1 0 1 1

2015/16 Risk Maturity Kent Final 27/04/2016 Louisa Neiles 3 2 2 0 1 2 1

2015/16 Victims Commissioning Kent Final 06/05/2016 Claire Gatward 3 3 FINALISED 03/06/16

2015/16 Cyber Security Kent Final 17/05/2016 Jules Donald 1 0 1 0

2015/16

2016/17

2016/17 Workforce Planning - Resources Mgmt Joint Final 12/07/2016 Richard Leicester 2 2 FINALISED 02/09/16

2016/17 Follow Up (Kent) Kent Final 13/07/2016 Paul Curtis 4 0 0 4

2016/17 Information Security Joint Final 19/07/2016 Jules Donald 2 0 2 0

7 25 27 3 14 20 4 11 7 4 5 2

59 37

2016/17

TOTALS22 11

Section 5: Reports and Recommendations Outside of Due Dates





Leavers and Movers – 07/09/2015: High=1 Med=1 High - Recovery of Warrant cards and ID cards


Medium – Line Manager Checklist


Seized Property – 19/08/2015: Med=1 Medium – Property Retention/Disposal

Update: There have been a number of complications and delays with finalising the draft policy, though it is nearly complete. Specific operations and findings from these have altered the approach on some of the relevant issues and have necessitated additional time and re-drafting. A final draft is almost ready to be put to consultation. Allowing for this delay and the time required to consult, can the deadline be revised to reflect this, to 31/12/16.That is a more accurate reflection of the work it has transpired has been required to properly respond to the findings of the audit as well as emerging operational issues.

ANPR Contract Management – 02/02/2016 : High=2 Med=1 - PROCUREMENT High - Signed contracts obtained for all contracts entered into

Update: It would appear that there is no contract available, therefore Bernice Milton, Deputy Head of Procurement, has requested that Barry Rimmer, the Category Manager, gets one put into place within the next four weeks. This contract is underpinned by a CCS Framework, however, we must ensure that we have a signed cool off contract on our records. Expected completion date 19th July.

High - Most appropriate contract manager for ANPR

Update: We have now entered into a structure where SMT would take this request forward. Request for work would be submitted, considered and assigned to an appropriate contract manager. SMT meet weekly to discuss and assign workload for each category manager.

Medium - Identify key risks Update: The Contract Management Module has been ordered – this will be part of the solution which is due for delivery in August/September with full utilisation by end of September.

FCR – Business Continuity – 30/03/2016 : High=1 Med=1 High - No overarching, documented IT disaster recovery plans were found to be in place relating

to the Kent FCR infrastructure systems and data. Update : The testing of IT BC/DR plans is not something that can be undertaken without involvement of the relevant IAO’s or business leads. Once the full detailed documentation as per 1.2 has been completed and reviewed, a process of practical testing will be discussed with IAO’s and/or business leads. This should start first quarter 2017.

Medium - testing the operation of all phases of its business continuity plans for the FCR. Update : Agreed by Crime and Incident Response with an implementation date of 15th April 2016 and action owner being Andy Mahoney, FCR Systems, Change and Air Support Manager.

Risk Maturity – 27/04/2016 : Low=1 Low - Central library of guidance to assist in succession planning.

Update : Awaiting update from Action owner – Implementation date of 31/06/16.


Total reports with recommendations outside of their due date = 1 Follow Up 17/04/14 : Med=1 Low=1 Medium - Estate Strategy

Update : Revision to policing model will occur by mid-March with Strategy remaining in abeyance until after PCC election

Low- Planned Maintenance Update: Atkins Ltd have now been commissioned to undertake Building Condition Surveys in both Essex & Kent and will commence surveys in August 2016 with a programme of completion within 12 months.

ITEM 9

1

Report to the Joint Audit Committee Date: 26th September 2016 Title: Strategic Risk Register From: Chief Finance Officer, Office of the Kent Police and Crime Commissioner Introduction 1. Both a strategic and an operational risk register are maintained by the Office of the

Commissioner. They are updated when necessary, and formally reviewed by the risk owners for each business area (Governance, Partnerships, Finance, Media and Communications, Correspondence, Complaints) and by the Chief of Staff.

2. The Strategic Risk Register is appended to this report; the operational one remains for office use, but the key points from both are reported on by exception below. The OPCC risk status and direction of travel document will now be included as standard.

Strategic Risk Register

3. The Commissioner’s Office and the Chief Constable both maintain their respective Strategic Risk Registers. In both cases, they represent a strategic view but are complimented by tailored approaches to operational risk management in each case; recognising the significant operational complexities in the case of the Chief Constable’s operations. The registers are presented to the Audit Committee at each meeting for members to review and comment.

4. The strategic risk register has seen a few notable changes. Clearly there is an

increased risk to the Office whilst there is no CFO in place, but the various mitigations are detailed in risk 1. Having a new Commissioner has meant a change to several key strategic documents, namely the Police and Crime Plan (risk 2) and the Commissioning Strategy (risk 6).

5. The risks around commissioning for victims services, IDVAs/domestic abuse services

and Restorative Justice have been revised to reflect the changing landscape. Indeed, an entirely new risk has been added, at number 15, around the devolution of victims and witness services.

6. There have been two topical risks removed from the register:

• New PCC and delivery of 100 day plan • CFO recruitment Both of these actions have been completed: a new CFO has been appointed and will be starting in October, and the new PCC’s start to his term of Office has been handled effectively. The OPCC was audited on the transition, and there was only one low level recommendation, thereby providing excellent assurance to the committee that the transition was successful. There are only four minor outstanding matters that are in the process of being completed. In addition, risk 10 has been closed, as the unqualified

ITEM 9

2

opinion on the accounts was achieved, but a new risk has been opened on the same topic for the next year. It has been kept as the same number.

7. Looking to the future, in connection with risk 7, there will be a substantial change for the Commissioner’s Office when it both becomes the appellate body for complaints, and takes responsibility for complaints performance. This will be a significant piece of work, involving changes to IT, staffing, a new performance framework, dealings with partners and the government, publicity, and working closely with Kent Police.

8. The operational risk register has been significantly reviewed, and the changes are

detailed below. • The risks around the two Heads of Department going on maternity leave have been

removed, as both have returned. • The risk around the transition to a new Commissioner has been removed, as all the

operational issues have been resolved. • Recruitment and training of non-executives was to be removed from the register as it

related to the need to recruit Legally Qualified Chairs for misconduct hearings; however, given the need to recruit two new members of the Audit Committee and potentially new independent members for misconduct panels, it will remain.

• There is now only one member of staff in the Communications Team in the Office; therefore the risk around the junior members has been removed, and a new one added re. the capacity and cover for media issues.

• The new correspondence system that was to be introduced is now no longer fit for purpose; work continues on finding a replacement.

• As the Youth Advisory Group is no longer proceeding, this risk has been withdrawn and replaced by a similar risk around the Mental Health Board, recognising the issues in starting a strategic board from scratch and dealing with partners.

Recommendation

9. The Committee are invited to note and discuss the key risks.

ITEM 9 Appendix 2

1

Inherent Risks

1. Failure by the PCC to ensure effective financial control and financial planning processes for the ‘group account’ of the Chief Constable and Office of the Commissioner combined.

Risk type: Financial Status Amber Direction of risk travel Increasing Key Mitigations Currently, established Force CFO in place, work of internal and external audit, business case approach and savings monitoring in place, capital approval board in place, and financial regulations in place. Key Issues affecting mitigation Ensuring Force core financial reconciliations are undertaken on time and generally ensuring work completed. OPCC currently has no CFO; however, one has been recruited and will be starting in October. Extensive process of induction underway. Cover being provided by Force and previous CFO where needed. Experienced finance officer in OPCC covering day to day finance and budgetary issues. Owner CFO Sources of Independent Assurance Internal Audit opinion; monitoring outturn

performance, recent PEEL assessment

2. a) Failure to produce a coherent annual short and medium term Police and Crime Plan linked to resources and with widespread support from key stakeholders b) Failure to ensure the delivery of the Police and Crime Plan

Risk type: a) Commissioner: organisation and delivery

b) Commissioner and Force: organisation and delivery

Status a) Green b) Amber

Direction of risk travel a) Level b) Level

Key Mitigations Confidence that can deliver as some aspects already have good progress, for example the signed commissioning grants and maintenance of key protocols. An interim version of the PCP has been drafted and approved to reflect the PCC’s 6 point plan followed by a thorough consultation and review process with regards to the publication of the next plan in April 2017. Yet to determine process for effective management of police and crime plan. Key Issues affecting mitigation Funding decreasing nationally for Police Forces. Expectations from Government are increasing. On-going difficulties working across county boundaries and in a fluctuating partnership landscape, with reductions in funding and capacity.

Report to the Joint Audit Committee

Strategic Risk Register as of September 2016

ITEM 9 Appendix 2

2

Owner Commissioner and Senior Staff Sources of Independent Assurance Police and Crime Panel reports;

Governance Board agendas/reports; Annual Report, recent PEEL assessment

3. Failure to produce a medium term financial plan consistent with the Police and Crime Plan and a process to deliver necessary savings.

Risk type: Financial Status Green Direction of risk travel Level Key Mitigations Savings plans identified (medium term). Key medium term assumptions, up to 2019/20, in place and in the Police and Crime Plan. Force processes and Programme Board in place. Reserves strategy revisited to allow for uncertainty. Good networks into Home Office to aid intelligence. Key Issues affecting mitigation Dependence on national economic events. Owner CFO and Chief of Staff Sources of Independent Assurance HMIC (PEEL); comparison of assumptions

with peers/MSG; periodic reviews by external auditors.

4. a) Failure to effectively engage with the public including the media b) Failure to effectively engage with key stakeholders, including the Police and Crime Panel

Risk type: a&b) Commissioner- organisation /delivery

Status a) Green b) Green

Direction of risk travel a) Level b) Level

Key Mitigations Regular formal and informal meetings at both officer and elected member/Commissioner level. Discussion meetings between the Commissioner and the Chair are productive. Police and Crime Panel have agreed a sub-group for police and crime plan to assist in productivity and effectiveness. Agreed levels of information provision and timetabling work in place to improve both structures and information flow. Standing invitation to PCP members to attend Governance Boards, and ad hoc invitations to Commissioner/Force events. Revised engagement and communications strategies running, and now business as usual. Relationship with media managed to promote positive issues and mitigate impact of negative ones. Better liaison and closer working relationship with Force Comms Team adding depth and resilience. Developing improved relationships across a diverse political landscape via frequent partner engagement on relevant topics. Plans for redesign of website. Regular engagement with partners, and seats on the relevant Strategic Partnership Boards. Key Issues affecting mitigation Potential for Panel members to move from ‘support and challenge’ to ‘hold to account’. Media agenda pre-defined. External reports and work of outside agencies (Home Office Select Committee) can impact. Capacity in the OPCC.

ITEM 9 Appendix 2

3

Owner Commissioner and Senior Staff Sources of Independent Assurance PCP reports; performance monitoring of

public use of website; publically accessible media reports.

5. Failure to put in place adequate processes to effectively hold the Chief Constable and the Force to account for performance and use of resources as per statutory requirements.

Risk type: Commissioner & Force- organisation/delivery

Status Amber/green Direction of risk travel Reducing Key Mitigations Governance Board now well-established and new PCC feels it is fit for purpose. However wider governance structure will continue to develop. ‘Deep dive’ approach for important/complex issues in advance of meeting. Attendance/involvement at key force performance meetings. Regular one-to-one meetings between the Commissioner and Chief Constable, and senior staff from both organisations. On-going liaison with HMIC and Home Office. Audit Committee now well-established, although will continually develop. Financial Regulations and Standing Orders in place. Performance and data analyst, and liaison officer posts to assist with hold to account function. People Board and External Ethics Committee currently under review. HMIC PEEL assessments are now fully reported which has provided another mechanism for holding Chief Constable to account from an independent source. Can use PEEL assessments to direct work. Key Issues affecting mitigation Recommendations and requirements from central government or inspectorates are not always feasible and are placing extra strain on both organisations. Owner Chief of Staff Sources of Independent Assurance HMIC, Governance Board; Auditor reports;

OPCC Performance meeting reports

6. Failure to effectively commission services and work with partners generally to deliver the Commissioner’s key objectives and priorities

Risk type: Commissioner & Force- organisation/delivery

Status Amber Direction of risk travel Level Key Mitigations Commissioning strategy for 16/17 finalised and endorsed by the new Commissioner. Commissioner has undertaken significant engagement with local authorities and partners, especially re. mental health. Monitoring in process. Head of Department returned from maternity leave. Key Issues affecting mitigation New PCC reviewing medium term strategy in the coming year. Continuing lack of understanding across partnership landscape about the role of PCC in commissioning. Continuing to identify areas where partners and third sector lack skills/experience to enable effective bidding into schemes, and reporting on outcomes. Difficulties extracting data from commissioned organisations for monitoring purposes; matter under review. Uncertain funding for long-term. Commissioning Strategy being revised; currently a lack of clarity around processes for applying, approving and monitoring outcomes. New Strategy will

ITEM 9 Appendix 2

4

reflect the Commissioner’s commissioning intentions and will ensure consistency of approach by the Office. Owner CFO and Head of Partnerships Sources of Independent Assurance Monitoring returns; Annual review of

Commissioning

7. Failure to record or appropriately handle complaints, including those about the Chief Constable, Commissioner or members of the staff from the Commissioner’s Office.

Risk type: Commissioner- organisation/delivery Status Amber Direction of risk travel Decreasing Key Mitigations Established processes in place to manage Chief Constable, Commissioner and OPCC staff members in place. Continued commitment to attend all available training, and network with complaints/legal colleagues. Established working relationship with Force PSD. Close working with Police and Crime Panel on Commissioner complaints. Recourse to specialised legal advice when required. Inspection of Force complaints and conduct matters carried out monthly, and more staff trained in this role. Regional meeting with OPCC officers and IPCC representative attended to discuss current complaints issues and new Policing Bill. Strong links with regional colleagues in peer reference group. Head of Department returned from maternity leave. HoD attends Home Office Steering Group developing new complaints legislation. Key Issues affecting mitigation Increase in complaints due to new PCC and those with ‘on-going’ issues viewing it as a new opportunity to re-open their complaints. These issues remain unchanged. On-going changes to legislation and complaints processes nationally make the landscape more complex and likely to increase chance of errors. Police and Crime Commissioners will be taking on appeals and some other elements of the complaints process, which will have a massive impact both for planning and implementation. Home Office proposals to allow variation by Force as to which elements of the complaints system is managed by which organisation will create potentially unacceptable variance when implemented. Requirement to find other Police Forces to investigate complaints. National organisation (IPCC) currently being completely re-organised and restructured to improve governance and accountability, as well as reviewing operations and expanding, and therefore in state of flux. Impossible to accurately predict, and therefore resource, this type of work. Owner Monitoring Officer (Chief of Staff) and Head

of Department Sources of Independent Assurance Regional meetings; IPCC liaison meetings;

IPCC outcome reports.

Topical risks

8. Failure to deliver longer terms solution for:

a) Initial response to victim b) Specialist support service c) Broader improvements for victims across the wider system

Risk type: Commissioner- organisation/delivery Status Green Direction of risk travel Level

ITEM 9 Appendix 2

5

Key Mitigations New PCC has endorsed strategy for 16/17. New Victim Support contract launched 1st April 2016. Victims Specialist Services Funding round undertaken in first quarter of 16/17 and commissioning areas reflected gaps identified through the Portsmouth University Needs Assessment. Victims Co-design Group in place to look at wider improvements for victims’ services and Compass House is in operation. Victims Panel also in place to obtain the views of victims in the development and delivery of services. Key Issues affecting mitigation Positive engagement of wider partners in specialist provision. Complexity of project and number of people/agencies involved. Evidence base for commissioning of services is still developing due to the previous national commissioning approach. Owner Chief of Staff and Head of Partnerships Sources of Independent Assurance Contract management processes. Sign off

from KCJB. Third party references.

9. Ensuring a coherent approach to Restorative Justice. Risk type: Commissioner and Force-

organisation/delivery Status Amber Direction of risk travel Level Key Mitigations Current co-funded RJ contract managed by KCC ends autumn 2016. Challenges around current contract and working with KCJB and partners to work on long term strategy and sustainable funding for Kent. Working with partners to design solutions, which will be communicated to the public so victims know how to access RJ. New PCC active in moving the agenda forward. Also a key priority for new PCC, but developing partners’ position opens new opportunities. Key Issues affecting mitigation Lack of understanding of funding available for RJ and restriction on victim services funding devolved to commissioner’s office for victim initiated RJ only. Capacity continues to affect mitigation. Extremely complex project. Public expectations could be unreasonably high and hard to manage. Potential for it to be poorly applied, leading to challenges from both victims and perpetrators. Differing priorities of the partner agencies involved. Commissioning timescales for new service are challenging and there is need to have sound evidence base along with understanding victims’ needs to support the service design. Owner CFO and Head of Partnerships Sources of Independent Assurance Partnership meetings, including KCJB;

victim feedback

10. Failure to ensure an unqualified opinion on the accounts by the relevant date in 2017.

Risk type: Financial Status Amber Direction of risk travel Level Key Mitigations Provisional accounts to be published before 31st May 2017 deadline. A new detailed action plan agreed with external auditors. Even more detailed working with EY. Additional

ITEM 9 Appendix 2

6

intensive training was provided in previous years, and now CPD is embedded. Early close brought forward. Key Issues affecting mitigation New project plan in place, specific training by External Auditors, and bi-monthly monitoring by the Commissioner’s CFO. Auditor capacity and approach being reviewed. Force Finance Dept currently at strength but always the potential for issues with staffing owning to natural churn and attractiveness of private sector. New PCC CFO not in place until end of October. Owner CFOs of Force and Commissioner Sources of Independent Assurance EY

11. Failure to plan for and implement new Government’s agenda. Risk type: Commissioner- organisations and delivery Status Green Direction of risk travel Level Key Mitigations Inevitably, the new PCC brings new and different networks to the OPCC. Experienced staff across both OPCC and Force. Force already in a strong position in terms of operational organisation and proven ability to implement change. Close links with the national organisation (APCC) to feed into national policy, make representations, and ensure the organisation is kept up to date. Necessary financial planning in place over medium term. Linking in with national organisations and Home Office in relation to Fire and Rescue proposals. Chief Constable sits on Kent Joint Chiefs meeting. Key Issues affecting mitigation Draft Policing Bill issued February 2016 and currently at committee stage. The House of Commons agreed a carry-over motion for the Bill on 7th March 2016, which means consideration of the Bill will be resumed in the 16-17 session. Very broad approach to policing reforms will be resource/personnel intensive. Morale decreasing. Funding for Police and partners to reduce in real terms. Drive of emergency service collaboration. Owner Commissioner and Chief of Staff Sources of Independent Assurance HMIC

12. Failure of implementation of Force’s IT systems, and/or ‘Athena’ would have significant impact on all Force operations and work with partner agencies (as would other major IT infrastructure developments).

Risk type: Commissioner/Force- organisational delivery

Status Amber / Red Direction of risk travel Level Key Mitigations Holding Force to account via various governance arrangements e.g. Audit Committee and one to ones with Chief Constable. In respect of Athena, CoS sits on Strategic Athena Management Board (SAMB) where issues are discussed as necessary. Chief of Staff and CFO remain actively involved in regular discussions with Head of IT on broader IT developments. Recent commissioning of independent review of Athena. ‘Methods Advisory’ been commissioned to carry out back record conversion. SAMB are requiring contract to deliver remedial plan. Force proactively exploring extending current systems should this be needed to ensure continuity. Key Issues affecting mitigation

ITEM 9 Appendix 2

7

In respect of Athena, the regional nature of project. Force-wide change will impact on all officers’/staff working practices. More generally, capacity, scale and pace are (inevitable) issues. Force are to appoint a Head of Delivery at Chief Officer Level. Owner Commissioner, CoS and CFO Sources of Independent Assurance Method and Mason consultancy review

13. Failure to ensure partners work together to effectively commission Domestic Abuse Services for all risk levels

Risk type: Commissioner- organisational and delivery Status Amber Direction of risk travel Level Key Mitigations IDVA contract extended to 31 March 2017. Broader KCC partner led commissioning approach in development, with a draft specification in place and ‘meet the market’ events being held. Key Issues affecting mitigation Partnership working on this matter not fully or effectively developed, in particular engagement and funding from CCGs. The county wide service ambition is also based on funding commitments from other partner agencies and discussions are on-going to secure commitments. Potential for Medway to commission services separately but no further updates on progress. There is an on-going risk reference specialist service provision for DA victims, particularly those assessed as high and medium risk. Funding commitment from strategic partners to deliver service in long term. The commissioning timescales are exceptionally tight for service to commence on 1 April 2017. Owner CFO and Head of Partnerships Sources of Independent Assurance Commissioning Task Group, Governance

Board and relevant partnership meeting structures

14. Existing collaboration / Regionalisation Risk type: Commissioner and Chief of Staff

Status Green / Amber

Direction of risk travel Level

Key Mitigations

Chief Constable, Chief of Staff and Commissioner engaged in consideration and discussions and testing thinking with HMIC. PCC and Chief of Staff attend both Eastern and South Eastern Region meetings to ensure continuity.

Key Issues affecting mitigation

Partners and other organisations considerations. Increasing challenge operating in 2

ITEM 9 Appendix 2

8

regions.

Owner Chief of Staff

Sources of Independent Assurance Governance Board, HMIC

15. Devolution of additional victims and witness services Risk type: Commissioner and Force-

organisation/delivery

Status Amber

Direction of risk travel Level

Key Mitigations

Senior members of staff engaging with both the MoJ and the national representative body, the APCC, to get clarity on the issue. Potential for one year extension being explored.

Key Issues affecting mitigation

Lack of certainty re the timescales of devolution, which is of particular concern to the Court Based Witness Service as this is due to end on 31 March 2017. Commissioning timescales for Commissioners to have service in place for 1 April 2017 are exceptionally challenging. The volume of services such as the Homicide Service will be low for Kent but the value and need for the services is great and will require balancing. Capacity within the partnerships and commissioning team will also need to be considered.

Owner CFO and Head of Partnerships

Sources of Independent Assurance MOJ

ITEM 9 Appendix 1

Office of Police and Crime Commissioner Strategic Risk Register as at March 2016

Inherent risks

Risk July Status & Direction of risk Travel

September Status & Direction of risk Travel

1. Failure by the PCC to ensure effective financial control and financial planning processes for the ‘group account’ of the Chief Constable and Office of the Commissioner combined.

2. a) Failure to produce a coherent annual short and medium term Police and Crime Plan linked to resources and with widespread support from key stakeholders

2. b) Failure to ensure the delivery of the Police and Crime Plan

3. Failure to produce a medium term financial plan consistent with the Police and Crime Plan and a process to deliver necessary savings.

4. a) Failure to effectively engage with the public including the media

b) Failure to effectively engage with key stakeholders, including the Police and Crime Panel

5. Failure to put in place adequate processes to effectively hold the Chief Constable and the Force to account for performance and use of resources as per statutory requirements.

6. Failure to effectively commission services and work with partners generally to deliver the Commissioner’s key objectives and priorities

7. Failure to record or appropriately handle complaints, including those about the Chief Constable, Commissioner or members of the staff from the Commissioner’s Office.

ITEM 9 Appendix 1

Topical Risks

Risk July Status & Direction of risk Travel

September Status & Direction of risk Travel

8. Failure to deliver longer terms solution for: a) Initial response to victim

8. b) Specialist support service

8. c) Broader improvements for victims across the wider system

9. Ensuring a coherent approach to Restorative Justice.

10. Failure to ensure an unqualified opinion on the accounts by the relevant date in 2015.

11. Failure to plan for and implement new Government’s agenda.

12. Failure of implementation of Force’s IT systems, and/or ‘Athena’ would have significant impact on all Force operations and work with partner agencies (as would other major IT infrastructure developments).

13. Failure to ensure partners work together to effectively commission Domestic Abuse Services for all risk levels

14. New PCC and delivery of 100 day plan

REMOVED

15. CFO Recruitment

REMOVED

16. Existing Collaboration & Regionalisation (See report)

ITEM 9 Appendix 1

17. Devolution of additional victims and witness services

NEW

Item 10

Report to the Joint Audit Committee Date: 26th September 2016 Title: Financial Monitoring From: Chief Finance Officer to the Chief Constable

Kent Police Financial Position as at Period 4 – 201 6/17

1.0 Purpose

1.1 This report includes both the Chief Constable and the Police and Crime Commissioner’s details of the current forecast outturn position up to 31st August 2016 for revenue and capital budgets.

2.0 Revenue Summary 2.1 The net revenue budget for the year is £278.4m, an increase of £4m compared to

last year. The forecast is showing an underspend of £0.92m (0.03% of total budget). 2.2 Summary position

Position as at Period 3 Forecast Budget Variance £000’s £000’s £000’s 278,304 278,396 (92)

2.3 This forecast is based on actual expenditure and income for the Force up to 31st

August 2016. While it is not made on a full accruals basis in terms of journals being posted into the Force’s accounting system, detailed forecasts are made and included in the above underspend.

2.4 The above forecast continues to include the funding of ill-health retirement of £2.0m and redundancy costs of £1.0m from the underspend. The under-spend has reduced by £2.44m from last month following the inclusion of further in-year cost pressure. These are predominately made up of: £0.48m Allard and Others v Devon and Cornwall Police; anticipated increase in insurance premiums from October onwards totalling £0.46m; provision for additional police allowances £0.2m; £0.7m total costs of recruiting 25 PSE’s under PPU; increase of £0.34m under injury costs to bring this in line with current payments.

3.0 Capital Summary

3.1 The total approved budget for the year is £18.9m across IT, Estates, Transport, Plant

and Equipment. This is comprised of £4.6m unspent approved projects from the previous year and scheduled for completion in 2016/17; £14.3m of new approved schemes for 2016/17 includes £1.36m match funding on successful Innovation Fund bids.

Item 10

3.2 The latest forecast from project and programme managers is that a total of £14.3m

will be spent against the £18.9m budget. A forecast underspend of £4.6m and delivery of 76% of the full programme. The underspend has reduced by £0.48m from previous month following detailed review of several IT programmes. Finance continue to work closely with Project Managers to ensure all projects in progress are analysed in detail against their current forecasts to allow additional initiatives to be approved from the underspend.

4.0 Revenue Position

4.1 The Force’s revenue budget outturn for the year is an under spend of £0.92m.

4.2 Subjective comparison of Budget against Forecas t as at Period 4

Subjective Category Note Budget Forecast Variance

£000's £000's £000's

Police Pay 4.3.1 166,938 165,396 (1,542)

PSE Pay 4.3.2 73,662 69,115 (4,547)

Other Pay Costs 4.3.3 5,080 9,186 4,107

Total Pay

245,679 243,697 (1,982)

Police Overtime

4,712 5,704 992

PSE Overtime

837 1,101 265

PCSO Overtime

0 4 4

Total Overtime 4.3.4 5,549 6,809 1,261

Premises 4.4.1 20,531 20,516 (14)

Transport 4.4.2 6,083 6,610 526

Supplies & Services 4.4.3 21,260 26,265 5,005

Third Party Payments

6,514 6,559 44

Total Running Expenses

54,388 59,950 5,561

Capital financing and contributions

0 2 2

Pension Administration Costs

164 (130) (294)

Expenditure Sub-Total

305,780 310,329 4,549

Income 4.4.4 (3,772) (4,899) (1,127)

Reimbursed Services 4.4.4 (8,942) (12,008) (3,066)

Transfers to & from Reserves 4.4.5 4,139 3,422 (717)

Total Net Expenditure

297,206 296,844 (361)

Overseas Funding / Partnership Funding 4.4.4 (18,809) (18,540) 269

Overall Total 278,396 278,304 (92)

*Other pay costs includes: ill health and injury retirements, temporary or agency fees, assessors’ fees,

employee related insurance costs and recruitment advertising.

4.3 Pay Budgets Total pay is underspent by £2.0m.

4.3.1 Policy Pay

Item 10

Police pay is currently forecasting an under-spend of £1.54m a reduction of £0.2m from prior month. This is due to the inclusion off £0.203m provision for additional allowances.

4.3.2 PSE Pay

PSE pay overall underspend is £4.54m. This is broken down into three elements, Kent only PSE positions; PCSO’s and Collaborated positions with Essex. PSE pay (excluding PCSO's) are currently forecasting an over-spend of £3.35m an increase of £0.5m from previous month which is reflecting 25 additional recruits under PPU anticipated to start from October 2016. This amount does not include the income received through collaborated positions with Essex of £6.59m, which accounts for a net under-spend of £3.25m. The total underspend still accounts for 46 vacant PCSO posts totalling £1.3m as well as continued high vacancy rates in several departments as with last year. It is highly likely the under-spend will continue to escalate throughout the year as and when pay initiatives are delivered through the savings programme. However, where departments are experiencing difficulties maintaining service levels, permission is being sought to utilise the underspend on PSE pay within the overall departmental budget to buy in resources from agencies, delivery partners or in some instances through the use of overtime.

4.3.3 Other Pay Costs

Other pay costs are forecast to be overspent by £4.1m. The additional increase mainly arises from: an uplift in injury payments to bring it in line with current costs of £0.34m per month; £0.95m increase in agency costs to cover the 25 recruits under PPU; plus an anticipated increase in employee related insurance from October onwards following speculations based on current trends forecasted at £0.18m. Redundancy costs remain forecasted at £1m and £2m for officer’s retiring under ill health. Although there is no budget set under ill health retirement, the current year forecast is for 25 officers to retire on the grounds of ill-heath (actual to date 10.9 FTE).

4.3.4 Police & PSE Overtime

Police and PSE overtime are £1.26m over budget, mainly relating to policing the demonstrations at Dover earlier this year. This is an increase of £0.1m agreed additional overtime to cover PPU vacancies until September 2016.

4.4 Non Pay Budgets

4.4.1 Premises

Overall premises costs are within budget. 4.4.2 Transport

There is an increase in overspend under transport totalling £0.3m. The increase predominantly relates to speculations in increased motor insurance premium from October onwards of 50% (£0.28m), plus a rise in local duty rate of £0.03m for Special Constables.

4.4.3 Supplies and Services & Third Party Payments

There is a further increase in the overspend under supplies and services and third party payments. This is as a result of: notification of Allard and others v’s Devon and Cornwall Police case anticipated at £0.48m; plus £0.1m to the ICO; and increase in coroner’s costs and redundancy fees to KCC (£0.14m). However some of these costs have been offset against insurance transfers to reserves.

4.4.4 Income

Item 10

Income has increased predominately following an increase in NHS funding of a further 5 nurses totalling £0.2m.

4.4.5 Transfer to & from Reserves The movement in transfer to and from reserves consists of approved underspend to be transferred to support IT capital projects totalling £0.2m.

5.0 Balance Sheet items

5.1 Accounts Payable (invoices due to suppliers)

Due date Value £ Number invoices

0-30 Days (7,315,746) 1,004 31-59 Days (341,879) 62

60-120 Days (426,657) 74 121 + Days (745,027) 129 Grand Total (8,829,309) 1,269

There are no issues in negligence in payment terms, payables relating to 31 days or more are business rates instalments.

5.2 Accounts Receivable (invoices due from customers) Standard Terms 30 Days

Days in Arrears Value 0 Days 563,116

1-30 Days 486,313 31-90 Days 90,696

Over 90 Days 67,384

Grand Total 1.207,509

Invoices over 31 days are continually reviewed and pursued, there are no issues currently identified in the above receivables.

Item 11

Report to the Joint Audit Committee Date: 26th September 2016

Title: Statement of Accounts and Annual Governance Statement

From: Chief Finance Officer to the Chief Constable

1. The audited Statement of Accounts for the Police and Crime Commissioner, the Chief

Constable and the Group Accounts have to be published by the statutory deadline of

30th September. As has previously been communicated to Audit Committee members

this deadline was achieved and I’m pleased to report that the Annual Accounts were

signed off with an unqualified opinion by our auditors, Ernst & Young on Friday 12th

August. Some 6 weeks ahead of the national deadline.

2. This represents a considerable success of which the Finance Department are rightly

proud. The work to continuously improve does not stop here however and the next

report outlines the process being undertaken to make further process improvements

next year.

3. Full copies of the 2015/16 Group and Police & Crime Commissioner Accounts along

with those of the Chief Constable are attached for information. These include the

Annual Governance Statement which was amended from the Draft Accounts

following the discussion at the last Audit Committee and some additional clarity from

EY.

4. The audit of the Whole of Government Accounts is scheduled for completion by the

statutory deadline but neither our auditors nor ourselves are expecting any problems

in achieving this deadline.

5. The Audit Results Reports (ARR) for the annual audit highlighted several

presentational amendments to be made in the Accounts but I am pleased to report

that no journals were required between the Draft Accounts and the Final version.

Two comments were made in the ARR which members may wish to have

highlighted. These were as follows:

a. A number of journals were entered into the General Ledger without header

text. The Finance Team have thoroughly reviewed this and have ascertained

that of the 2,650 journals entered last year (manual and system generated)

24 were entered without a header and 50% of these related to recharges for

rail warrant journeys. These journals are no longer done as the charges have

been centralised for 2016/17 and a process has been implemented in SAP to

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ensure all other journals must have header text. It is worth commenting that

all journals were found to have been valid and appropriately authorised.

b. A schedule of contracts was found to be incomplete. In parallel to the audit

the Director of Support Services commissioned a review of all contracts and

work to ensure a schedule was produced listing all contracts, their amounts,

start and end dates. The CFO has requested that this is maintained and

reviewed as part of the monthly controls performed by the Finance

Department.

6. In all this has been a very successful closure process which has been challenging and

ambitious but through the hard work of a number of people significant improvements

in terms of quality and timescales have been achieved. The following papers outlines

how we intend to build on this success for subsequent years.

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Accounts for the Chief Constable for Kent Police Audited Statement of Accounts 2015 - 2016

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Contents

Page no. Narrative

3

Statement of Responsibilities for the Statement of Accounts

6

Annual Governance Statement

7

Independent Audit Report to the Chief Constable for Kent

12

Comprehensive Income and Expenditure Statement

16

The Balance Sheet

17

The Cash Flow Statement

19

The Movement in Reserves Statement

20

Notes to the Accounts

22

Police Pension Fund Account Glossary of Accounting Terms

47

49

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Narrative report to the Accounts of the Chief Const able of Kent Introduction The Police and Crime Commissioner (PCC) and the Chief Constable were established as separate legal entities under the Police Reform and Social Responsibility Act 2011. The Chief Constable has a statutory responsibility for the control, direction and delivery of operational policing services for Kent and Medway. The PCC is elected by the public every four years to secure the maintenance of an efficient and effective policing service for the county and to hold the Chief Constable accountable for the exercise of their functions and those persons under their direction and control. The Chief Constable has operational control of Police Officers, PCSOs and all other staff except those working in the Office of the Police and Crime Commissioner. The PCC has strategic control of all assets and liabilities and is responsible for establishing most reserves and controlling all cash flow. These accounts explain how the resources provided by the PCC have been used to deliver operational policing services in Kent. The Statement of Accounts The accounts are prepared in accordance with the CIPFA Code of Practice on Local Authority Accounting in the UK 2015/16: Based on International Financial Reporting Standards (IFRS). These Accounts should be read in conjunction with the Kent Police Group Statement of Accounts for 2015/16. The Chief Constable is a separate corporation sole and must therefore prepare Accounts but all assets and liabilities are held by the Police and Crime Commissioner so the Group Statement should be referred to for an overview of the financial position of Kent Police. To assist the reader an explanation of the various sections and key financial statements contained within the Statement of Accounts is set out below. Auditor’s Report (pages 12 to 15) – This sets out the opinion of the Chief Constable’s external auditor on whether the accounts of Kent Police give a true and fair view of the financial position and operations of the Force for 2015/16. Statement of Responsibilities (page 6) - This sets out the respective responsibilities of the Chief Constable and the Chief Finance Officer. Comprehensive Income and Expenditure Statement (CIE S) (page 16) – This summarises the resources generated and consumed in the year. Balance Sheet (page 17-18) – This shows the assets and liabilities of the force as at 31st March 2016 and its overall financial position at that date. The Balance Sheet of the Chief Constable for Kent shows a £3 billion liability against Police Officer and Police staff Pension Liability. This is Kent’s share of a national liability and is offset in full by the Pensions Reserve. Cash Flow Statement (page 19) – This statement shows the inflows and outflows of cash to the force. The Chief Constable does not operate a bank account and therefore the balance on this statement is £nil Movement in Reserves Statement (page 20-21) - This statement shows the movement in the year on the reserves. The surplus or (deficit) on the Provision of Services line shows the economic [rather than cash] cost of providing policing services, more details of which are shown on 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. Notes to the Accounts (pages 22 to 46) – These notes are of fundamental importance to the correct interpretation and understanding of the Statement of Accounts and the presentation of a true and fair view. They have three significant roles: • presenting information about the basis of preparation of the financial statements and the specific accounting

policies used; • disclosing the information required by the CIPFA Code of Practice that is not provided elsewhere in the financial

statements; and • providing information that is not provided elsewhere in the financial statements, but is relevant to the

understanding of them.

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Police Pension Fund Accounts (page 47-48) – Sets out the financial position of the Police Pension Fund as at 31st March 2016. Glossary of Terms (page 49-52) – Wherever possible the use of technical jargon has been avoided. However, the Statement of Accounts does contain some accounting and local government terminology and a glossary of terms is provided at the end of this document which aims to simplify and explain such terminology. General Context and Medium Term Challenge

In the Spending Review on the 25 November 2015 the Chancellor announced that the total budget for policing would be protected in real terms and that local force budgets would be protected in cash terms. Both assertions require each Police and Crime Commissioner (PCC) to set the maximum precept increase allowed in each of the next four years.

On the 17 December, the Policing Minister announced the general grant allocation for each force area for 2016/17. In 2016/17, no PCC will face a cash reduction in “direct resource funding” assuming precept income is increased to the maximum available. For policing, direct resource funding is deemed by Government to be the sum of formula funding plus legacy council tax grants plus precept. The actual cash cut to formula grant funding for 2016/17 was 0.6% for all PCCs. The PCC for Kent introduced a precept increase of £5 for Band D properties. Despite the precept increase, the combination of grant reductions and spending pressures means a savings gap in 2016/17 of £8.7m but with a delivery plan identified and implemented by the Chief Constable by the beginning of the year. The Home Office has yet to issue specific local allocations for future years. For the purpose of current planning, it is assumed Kent loses an additional £1m in grant each year from 2017/18 onwards. In addition, it is assumed the cost of the new “Apprenticeship Levy” will be £1.3m for Kent Police. If these grants (and special levy) assumptions are combined with a roll forward of normal wage and price assumptions and an assumption of 2% precept increases from 2017/18 onwards, the savings gap over the 4 years to 2019/20 is £30m. However further top slicing of grant and/or increased cost pressures would add to the £30m gap. For that reason a 10% contingency has been added, in the latter two years, to make a total savings challenge of £33m over the four years to 2019/20. Furthermore, this gap does not take into account the possible impact of the Formula Review. Clearly, the position locally is crucially dependent on the public sector spend and deficit targets and there must be a risk that economic conditions could put pressure on the current CSR settlement through to 2020. The national funding challenge and uncertainty applies to all Forces. Building on the effective and timely response to previous CSR challenges leaves Kent Police well placed to deliver the future savings requirement but this will be on top of approximately £62m of savings delivered since 2011. Inevitably, such continuing savings as a result will impact on service delivery but the Chief Constable is committed to minimising the front line impact of future savings requirements as far as possible. Ensuring visible, local and cost effective policing remains at the core of how Kent Police will respond to the further challenges arising from future further savings requirements. The response will involve more continuing investment in innovation and demand management, alongside efficiency, to identify options to deliver necessary savings in a way that both minimises front line policing impacts as far as possible but ensures that any such impacts are implemented last in any savings package and only after the level and timing of key funding changes have been confirmed. Performance and value for Money Kent Police are subject to a formal inspection regime undertaken by Her Majesty’s Inspector of Constabulary (HMIC). This regime is a vital part of the assurance that the PCC seeks in holding the force to account for VFM. As well as specific national studies, the HMIC regime covers an annual assessment of three main themes for each Force (referred to as the PEEL inspection) as follows: efficiency, effectiveness and legitimacy of the force. The efficiency element includes an assessment of the financial sustainability of the Force over the short and medium term. During the review in 2015, Kent Police were graded as ‘good’, good’ and ‘outstanding’ respectively. Kent was the only force in the country to secure ‘outstanding’ for legitimacy and within the efficiency element secured an ‘outstanding’ grade for financial management and sustainability. In addition, the HMIC also publish key VFM statistics for all police forces annually. This is another key source of assurance. Kent is shown to be relatively very efficient compared to other Forces on most measures, especially as regards net cost per head and policing precept per average property.

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As referred to earlier, the Force have shown a consistent pattern of sensible forward planning and disciplined accelerated delivery of savings requirements but within a framework of clear service vision and use of technology and innovation to minimise front line impact. Financial Performance The Accounts of the Chief Constable for Kent show a net cost of policing services of £282.4m split between service expenditure categories such as Local Policing, Dealing with the Public and Criminal Justice for example. This is a reduction from £293.3m in 2014/15 and reflects the continued impact of the Comprehensive Spending Review and the savings needed to be made by Kent Police following the reduction to the Police Grant. The expenditure is offset by an intra-group transfer from the PCC as all funding is received by the Police and Crime Commissioner. The Chief Constable is responsible for the administration of the Pension Funds which is why Pension Interest Costs of £109.8m and the Re-measurement of net defined liability (£549.8m) are included within the CC’s and Group Accounts. The re-measurement costs are directly taken from the independent actuarial assessment and can vary significantly between years. These are notional costs and included in the Accounts of the CC as these, as with the Group Accounts are produced on an International Financial Reporting Standards (IFRS) basis (as explained in the Narrative Statement for the Group Accounts). As stated above the Chief Constable does not hold any assets or liabilities which is why the Balance Sheet for the Chief Constable is largely empty. The only liabilities included within the Balance Sheet of the Chief Constable relates to either the Pension Fund or Short Term Compensated Absences (the financial quantification of any untaken annual leave or Time Off In Lieu balances for officers and staff under the direction and control of the Chief Constable). The pension liability is Kent’s share of a national liability and is included within the Accounts due to the requirements to produce IFRS compliant Financial Statements. A full explanation is provided within the Group Accounts. Accounting Policies are consistent with previous years with no significant changes. These policies are described under Note 1 of these Accounts. The Future The new Police and Crime Commissioner for Kent officially took up office on 11th May. Alongside coping with the medium term financial challenge, he will be developing his interim Police and Crime Plan for the remainder of 2016/17 and for the medium term. His manifesto details the following six key plan priorities: • Cutting crime and reducing re-offending • Delivering Value For Money • Visible, effective and dedicated policing • Putting the victim at the heart of the justice system • Tackling the misery caused by abuse, substance misuse and antisocial behaviour • Revolutionising how people with mental illness interact with the Police in Kent These six points are included within Chief Officer considerations for future growth plans and investment opportunities as well as consideration for savings in meeting the future challenge of demand management and reductions to funding brought about by the current CSR.

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Statement of Responsibilities for the Statement of Accounts for the Chief Constable of Kent The Chief Constable’s Responsibilities The Chief Constable is required:

• To make arrangements for the proper administration of his financial affairs and to ensure that one of his officers

(the Chief Finance Officer for the Chief Constable) has the responsibility for the administration of those affairs; • To manage his affairs to ensure economic, efficient and effective use of resources and safeguard its assets; • To approve the Statement of Accounts Completion of the approval process by the Chief Con stable of Kent Police I approve this Statement of Accounts for 2015/16 Alan Pughsley QPM Chief Constable 12th August 2016 The Chief Finance Officer of the Chief Constable’s Responsibilities The Chief Finance Officer of the Chief Constable is responsible for the preparation of the Statement of Accounts for the Chief Constable of Kent in accordance with proper practices as set out in the CIPFA / LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (The Code). In preparing this Statement of Accounts the Chief Finance Officer has:

• Selected suitable accounting policies and then applied them consistently; • Made judgements and estimates that were reasonable and prudent; • Complied with the Code of Practice. The Chief Finance Officer of the Chief Constable has also: • Ensured that proper accounting records are kept which are up to date; • Taken reasonable steps for the prevention and detection of fraud and other irregularities. I certify that the Statement of Accounts for the Chief Constable for Kent for the financial year 2015/16 have been prepared in accordance with proper accounting practices and provide a true and fair view of the financial position of the Chief Constable as at 31st March 2016 and his income and expenditure for the year then ended. Paul Curtis Chief Finance Officer of the Chief Constable 12th August 2016

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Annual Governance Statement 2015/16

Scope of responsibility 1. This statement is expressed in the name of the Police and Crime Commissioner (subsequently to be referred to in

this document as the PCC) but also covers the accounts of the Chief Constable. The PCC and the Chief Constable are responsible for ensuring that business is conducted in accordance with the law and proper standards and that public money is safeguarded and properly accounted for, and is used efficiently and effectively. More specifically, there are a number of statutory responsibilities that flow from the Police Reform and Social Responsibility Act 2011. (The PRSR Act 2011).

2. In discharging these various responsibilities both are responsible for putting in place proper arrangements for the governance of their affairs including the management of risk.

3. The PCC and Chief Constable endorse the code of governance consistent with the principles of the Chartered

Institute of Public Finance and Accountancy (CIPFA)/Society of Local Authority Chief Executives (SOLACE) Framework, “Delivering Good Governance in Local Government”. This statement explains how the PCC and Chief Constable comply with that Code and also meet the statutory requirement to prepare an annual governance statement. The PCC and Chief Constable endorse and comply with the CIPFA statement on the role of the Chief Finance Officer (CFO) in local government 2010 as set out in the application note, delivering good governance in local government. Both also endorse and comply with the relevant specific codes produced by both CIPFA and the Home Office arising out of, or related to the PRSR Act 2011. This includes the March 2014 CIPFA Statement on the role of the CFO and relevant parts of the Account and Audit Regulations 2015 and the Home Office Financial Management Code of Practice.

Purpose of the Governance Framework 4. The governance framework is interpreted to comprise the systems, processes, culture and values by which the

work of the PCC and their office is directed and controlled and how it accounts to, engages with, and provides leadership to the communities she serves. The framework enables the PCC to monitor the achievement of objectives including value for money. The system of internal control plays a significant part in the overall framework. It cannot eliminate all risk of failure to deliver such objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal controls is on-going and dynamic and designed to identify and prioritise key risks and to manage them as effectively as possible. The current governance framework covering the period up 31 March 2016 has been put in place since late 2012 and early 2013. This Annual Governance Statement reflects the arrangements in place for the year ending 31 March 2016 and also considers any significant changes up to the date of approval of the statement of accounts. It also covers the Chief Constable’s operations.

The Framework The principal elements of the Framework currently in place are as follows: Identifying and Communicating the Vision, Purposes and Outcomes. 5. For the year 2015/16, under the stewardship of the Commissioner in place, the key strands have been carried

forward from the 2012 election manifesto, crafted after extensive consultation with Kent’s residents at the time and subsequently reflected in the published Police and Crime Plan. As in previous years, these key strands were refreshed, following an extensive consultation with stakeholders for the 2015/16 Police and Crime Plan. It was similarly refreshed in producing the 2016/17 Police and crime Plan, published March 2016. For 2015/16, consultation and communication is conducted on a dynamic basis including , regular visits to different local areas, active Twitter and web / communication interaction, special forums and other events (e.g., regular meetings with business community leaders, Parish Councils. Feedback and queries are collated and shared with Kent Police if required. All correspondence is responded to and as far as possible key themes emerging are identified and shared with the PCC who decides if they warrant a more formal explanation from the Force or other agencies.

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6. Objectives for Partners and partnership working are primarily set out in the published Police and Crime Plan but

reflect on-going dialogue with key partners during the course of the year. There is a regular cycle of visits to local Community Safety Partnerships, and the PCC and his senior officers attend the Kent Criminal Justice Board. Office of the PCC senior staff attend the Kent County wide Community Safety Partnership and engage with other key partners such as the Health and Probation services.

7. As well as direct engagements, web, social media and correspondence accountability to stakeholders in the

widest sense, the PCC produces an Annual Report on performance against the Police and Crime Plan. That was done by the previous PCC in respect of 2015/16 and endorsed by the Police and Crime Panel in April 2016. By statute the PCC appears regularly before the local Police and Crime Panel.

Measuring and Controlling Risk 8. The Force and the Commissioner have risk registers, both at a strategic and operational level. These are

reviewed and challenged by the Joint Audit Committee. The Force strategic risk register is managed by a senior member of the Chief Constable’s team and operational risks are managed at all levels throughout the organisation. The Office of The Kent Police and Crime Commissioner’s (OKPCC) risk register process is led by the PCC’s CFO and features as part of routine discussion on overall delivery in both the Commissioner’s weekly meetings with his senior team, and senior officers’ management meetings. Both registers form part of established management processes within respective operations and are reviewed periodically by Internal Audit on behalf of the Joint Audit Committee. Understandably, the Force’s risk management needs to be much more complex given the size of the organisation and the inherent risks in operational policing. The risk management process within the OPCC contains documented sources of risk assurances. A number of key force personnel have formal accreditation in the management of risk.

Fulfilling Statutory Responsibilities to ‘Hold the Force to Account’ 9. Although the Chief Constable is responsible for operational policing matters, the PCC is required to hold him to

account for the exercise of those functions and those of the persons under his direction and control. The PCC must be satisfied that the Chief Constable has appropriate mechanisms in place and that these operate in practice. Core arrangements have been put in place since November 2012 that involve senior OKPCC staff attending key Force performance meetings and carrying out further checks such as sampling complaints. In addition, a PCC Governance Board meets bi-monthly with a published agenda and papers to hold the Chief Constable and the Force to account in public for performance. There is a weekly one to one meeting between the Commissioner and the Chief Constable. All of this is complemented by regular liaison between senior OKPCC staff and senior Officers within the force including Chief Constable and Chief Officers on general matters but including finance, estates, procurement and IT matters. This includes OPCC membership e.g. IT Governance Board, Estates Strategy Board and Capital Management Board. There is also a Joint Collaboration Governance Board in place to reflect the extensive collaboration arrangements with Essex Police. The above is supported by the agreed provision of crime and other performance data on a regular basis, normally monthly, to the PCC’s office.

10. In addition, for 2015/16, the Commissioner had in place additional arrangements to augment the ‘holding the

force to account’ function. This involved People Board reviews of organisational health, looking at ethics, morale and integrity, and also equality and diversity. Representatives from across the Force, support groups and individual officers attended with a focus on a supportive approach. For 2015/16, there was an External Ethics Committee, intended to complement the Force’s Internal Ethics Committee, reviewing the topics and actions that result.

11. In addition, where a PCC judges it necessary, the PCC can commission HMIC to conduct surveys or

investigations into any aspect of Force performance that may cause concern from time to time. This has happened with regards to Kent’s crime reporting and recording practices in the past.

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Transparent Decision Making, Governance and Clarity of Roles 12. The PCC has a comprehensive framework for decision making, including specifically a scheme of consent to

operate between the PCC and the Chief Constable supported by financial regulations and standing orders for contract arrangements. It also includes key roles and responsibilities and is the essential framework for decision making. It is published on the website.

13. In conjunction with the Chief Constable, the PCC established a new independent Joint Audit Committee which

has been in operation since March 2013. The Committee provides independent assurance on the adequacy of the corporate governance and risk management arrangements in place and the associated control environment; advising according to good governance principles and proper practice. The Joint Audit Committee has five independent members and is attended by External Audit, Internal Audit and both Chief Finance Officers and Director of Support Services; it meets four times a year.

14. All key decisions made by the PCC are published monthly, as well as all other transparency requirements, and

are provided to the Police and Crime Panel for information. The normal OKPCC provides for both Monitoring Officer and Chief Financial Officer advice in all key decision making processes and external legal advisors have also been retained. All meetings of the Governance, Audit and Collaboration Board/Committees are public with agendas published in advance and minutes published after each meeting. The Chief Constable meets with Chief Officer Colleagues at least weekly to discuss strategic and operational matters. These meetings are further supported by the monthly Strategic Change Board, chaired by the Deputy Chief Constable, at which staff associations are represented and which reviews all proposals for organisational savings and growth. The only avenues to approve changes to the establishment are now through this board or the weekly Chief Officer Strategic Meeting, chaired by the Chief Constable.

The force has a well-established with a broad representation, Ethics Committee, chaired by the Head of Professional Standards, ‘Ask the Chief’ web-pages and has recently introduced a web-portal to share ideas and comments around the force’s governance. Each of which actively encourages staff to raise questions around the running of the force and provide answers to them

15. The Policing Protocol defines the role of both the Commissioner and Chief Constable. At its heart is operational

independence for the Chief Constable but the setting of the strategic framework by the PCC for policy and the allocation of resources within which the Chief Constable operates and then holding the Chief Constable to account. In addition the Commissioner has broader partnership and criminal justice responsibility and powers.

16. The Commissioner has also agreed a Code of Conduct, based on the Nolan Principles, which will guide his

actions and decision making. Similarly, the Chief Constable has accepted and rolled out the Code of Ethics, based on the Nolan Principles, throughout the Force.

Effectiveness of the Governance Environment 17. The PCC and the Chief Constable have a shared responsibility to ensure an annual review of the overall

effectiveness of the governance system. The review is informed by the work of the internal auditors and key managers within the OKPCC and the Chief Constable team (with collaboration benefits from sharing the same external and internal auditors with Essex Police). It is also informed by the comments of external agencies as they apply to Governance. As a result, the following key points can be made to evidence on-going reviews of effectiveness: • All reports from the internal and external auditor were considered by the Joint Audit Committee. All findings

were accepted and new arrangements put in place to monitor implementation. • The outcome of HMIC inspections during the year have been shared with the Commissioner and Chief

Constable, and reported to the Governance Board as a matter of course.

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• The Force continues its strong record of delivery of savings plans in year. Over the medium term the PCC had

set the overall financial framework in consultation with the Chief Constable, and the Chief had developed an effective response to the CSR challenges through to 2019/20. These are considerably less than originally feared but still significant.

• HMIC inspections confirm considerable confidence in delivering savings and the processes underpinning

medium-term planning. More significantly the HMIC PEEL inspections rate the Force as the only outstanding force for the legitimacy of it operations. However, some areas of operational business were assessed as requiring improvement.

• The risk based work of internal audit during the year reveals a generally positive view of the control

environment. • The independent Joint Audit Committee in exercising the core functions of an audit committee, have

maintained a focus on testing and monitoring Force and PCC approaches to risk management. To date the Committee are very satisfied with the general management of these arrangements but recognise it is an on-going process.

• The Joint Audit Committee have undertaken an annual review of their own operations and effectiveness in line

with national audit office best practice guidelines. • On-going and dynamic reviews of crime performance data. • A new quality performance framework has been introduced by the Chief Constable throughout the Force. It

focuses on the quality of service. • Independent review of key processes occasionally commissioned by management.

Significant Governance and Control Issues Arising 18. The view of the PCC, supported by his statutory officers, and the Chief Constable supported by his Chief Officers

is that overall the effectiveness of governance, risk management and controls remain generally sound. In the 2014/15 Annual Governance Statement a number of actions were listed as required to enhance the control environment. Where appropriate these are repeated below but with the action, programme or result set out in bold:

a. Closure of account procedures While there have been considerable improvements on the previous year, not least in ensuring satisfactory closure within expected timeframes, the emergence of historic coding errors which came to light during the closing process in 2014/15, implies the process stills requires further improvement. This has continued to be a point of focus for 2015/16 and this will continue during 2016/17.

b. Impact of major ICT changes

This remains a continuing challenge in respect of major and complex system developments, and thus a continuing point of focus into next year. However, new and much more effective governance arrangements, involving the OPCC, have been put in place. More specifically, Athena remains a key issue given its complexity both in terms of service and governance. Considerable additional focus has been applied in the year but this carries forward into the next year.

c. Responding to statutory changes in function or responsibility - e.g. potential transfer of most complaints to the

PCC. The Police and Crime Bill have yet to pass into law. This risk area is therefore carried forward into 2016/17

d. Audit and succession planning for the Committee – including internal and external audit and accelerated

closure.

A degree of accelerated closure has been piloted for 2015/16 closure. This has proved a relative success. This will need to be continuing areas of focus next year. The Joint Audit committee has identified a sensible

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working solution to succession planning. Internal Audit was successfully retendered and the current incumbent was successful. In respect of external audit, like virtually all other local public bodies, the Joint Audit Committee is advocating a sector led approach if possible to the appointment of External Auditors for 2018/19 onwards. This will be a continuing task into next year

19. The following additional actions or areas of focus relating to overall governance have been identified for 2016/17:

a. On-going from the previous year: Closure of account procedures; Impact of all major ICT changes but particularly Athena, responding to the Police and Crime bill including in respect of Fire and Rescue services, appointment of external auditor for 2018/19, delivery of major change programmes and associated investment over the short and medium term

b. Further refinement to the pay budget setting process around vacancy rates in terms of the revenue budget and

forecasting/planning of capital expenditure c. Development of a new Police and Crime Plan, and related governance, under the newly elected

Commissioner d. Additional devolution of victim responsibilities to PCCs generally e. Responding to the consequences of the EU Referendum result

Opinion of the Internal Auditors 20. The following is the opinion of Baker Tilly:

Kent Police and Crime Commissioner

In our opinion, based upon the work we have undertaken, for the 12 months ended 31 March 2016, the organisation has an adequate and effective framework for risk management, governance and internal control. However, our work has identified further enhancements to the framework of risk management, governance and internal control to ensure that it remains adequate and effective.

Chief Constable for Kent

In our opinion, based upon the work we have undertaken, for the 12 months ended 31 March 2016, the organisation has an adequate and effective framework for risk management, governance and internal control. However, our work has identified further enhancements to the framework of risk management, governance and internal control to ensure that it remains adequate and effective.

Significant Changes in Governance after 31 March 2016.

21. The newly elected PCC, Matthew Scott, took up office on the 11 May 2016. On an interim basis, pending further

reflections during coming months alongside the necessary review of governance that will be needed on the launch of the new CIPFA/SOLACE requirements for next year, the PCC is satisfied with current arrangements. Furthermore the new PCC has confirmed the key commissioning priorities and allocations set out in his predecessor’s Police and Crime Plan. The new Commissioner will be producing his new interim Police and Crime Plan for the remainder of 2016/17 based on his manifesto promises and intends to publish his medium term commissioning priorities in autumn 2016.

Chief Constable for Kent

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INDEPENDENT AUDITOR’S REPORT TO THE CHIEF CONSTABLE OF KENT POLICE Opinion on the Chief Constable for Kent financial s tatements We have audited the financial statements of the Chief Constable for Kent for the year ended 31 March 2016 under the Local Audit and Accountability Act 2014. The financial statements comprise the:

• Chief Constable for Kent Comprehensive Income and Expenditure Statement;

• Chief Constable for Kent Balance Sheet;

• Chief Constable for Kent Cash Flow Statement

• Chief Constable for Kent Movement in Reserves Statement and the related notes 1 to 16

• Chief Constable for Kent Police officer Pension Fund Account. The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16. This report is made solely to the Chief Constable for Kent in accordance with Part 5 of the Local Audit and Accountability Act 2014 and for no other purpose, as set out in paragraph 43 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments Limited. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Chief Constable for Kent, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of the Chief Finance Of fice or the Chief Constable and auditor As explained more fully in the Statement of Responsibilities for the Statement of Accounts for the Chief Constable of Kent set out on page 6, the Chief Finance Officer of the Chief Constable is responsible for the preparation of the Statement of Accounts, which includes the financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16, and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Chief Constable for Kent circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Chief Finance Officer of the Chief Constable; and the overall presentation of the

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financial statements. In addition, we read all the financial and non-financial information in the Accounts for the Chief Constable for Kent Police Audited Statement of Accounts 2015-16 to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements:

• give a true and fair view of the financial position of the Chief Constable for Kent as at 31 March 2016 and of its expenditure and income for the year then ended; and

• have been prepared properly in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16.

Opinion on other matters In our opinion, the information given in the Accounts for the Chief Constable for Kent Police Audited Statement of Accounts 2015-16 for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we report by exception We report if:

• in our opinion the annual governance statement is misleading or inconsistent with other information forthcoming from the audit or our knowledge of the Council;

• we issue a report in the public interest under section 24 of the Local Audit and Accountability Act 2014;

• we make written recommendations to the audited body under Section 24 of the Local Audit and Accountability Act 2014;

• we make an application to the court for a declaration that an item of account is contrary to law under Section 28 of the Local Audit and Accountability Act 2014;

• we issue an advisory notice under Section 29 of the Local Audit and Accountability Act 2014; or

• we make an application for judicial review under Section 31 of the Local Audit and Accountability Act 2014. We have nothing to report in these respects Conclusion on the Chief Constable’s arrangements fo r securing economy, efficiency and effectiveness in the use of resources

Chief Constable’s responsibilities

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The Chief Constable is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements.


We are required under Section 20(1)(c) of the Local Audit and Accountability Act 2014 to satisfy ourselves that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. The Code of Audit Practice issued by the National Audit Office (NAO) requires us to report to you our conclusion relating to proper arrangements. We report if significant matters have come to our attention which prevent us from concluding that the Chief Constable has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all aspects of the Chief Constable’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively. Scope of the review of arrangements for securing ec onomy, efficiency and effectiveness in the use of resources We have undertaken our review in accordance with the Code of Audit Practice, having regard to the guidance on the specified criterion issued by the Comptroller and Auditor General (C&AG) in November 2015, as to whether the Chief Constable had proper arrangements to ensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people. The Comptroller and Auditor General determined this criterion as that necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether the Chief Constable put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2016. We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment, we undertook such work as we considered necessary to form a view on whether, in all significant respects, the Chief Constable had put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources. Conclusion On the basis of our work, having regard to the guidance issued by the C&AG in November 2015, we are satisfied that, in all significant respects, Chief Constable put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2016. Certificate We certify that we have completed the audit of the accounts of the Chief Constable for Kent in accordance with the requirements of the Local Audit and Accountability Act 2014 and the Code of Audit Practice issued by the National Audit Office. Debbie Hanson, Executive Director for and on behalf of Ernst & Young LLP, Appointed Auditor Luton 12 August 2016

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Comprehensive Income and Expenditure Statements (For the year ended 31st March 2016)

Kent Police Chief Constable

Not

es

2014/15 2015/16

Gross Expenditure

Gross Income

Group Net Expenditure

Gross Expenditure

Gross Income


£’000’s £’000’s £’000’s £’000’s £’000’s £’000’s

Local Policing 133,141 0 133,141 130,094 0 130,094

Dealing with the Public 23,399 0 23,399 22,418 0 22,418

Criminal Justice Arrangements 21,037 0 21,037 20,399 0 20,399

Roads Policing 10,580 0 10,580 8,683 0 8,683

Specialist Operations 15,534 0 15,534 12,584 0 12,584

Intelligence 15,273 0 15,273 14,795 0 14,795

Investigations 51,033 0 51,033 49,023 0 49,023

Investigative Support 6,795 0 6,795 7,308 0 7,308

Sub-total 276,792 0 276,792 265,304 0 265,304

National Policing 15,701 0 15,701 15,730 0 15,730

Corporate & Democratic Core 464 0 464 358 0 358

Non-Distributed Costs 300 0 300 1,019 0 1,019

Net Cost of Policing Services 293,257 0 293,257 282,411 0 282,411

Impairment Intra Group Funding For Chief Constable's Net Service Cost

(283,504) (287,704)

Net Cost of Services 9,753 (5,293)

Other Operating Expenditure Net (Gains) / Losses on disposal of fixed assets 0 0 Total Other Operating Expenditure 0 0

Financing & Investment Income & Expenditure

Interest Element of Finance Leases 0 0 Interest Payable on PFI Unitary Payments 0 0 Pensions Interest Cost 121,066 109,813 Investment Interest Income 0 0 Income & expenditure in relation to investment properties & changes in their fair value 0 0 Total Financing & Investment Income & Expenditure 121,066 109,813 Taxation & Non Specific Grant Income Capital Grants 0 0 Precept Income 0 0 Non-service related Government Grants 0 0 Home Office Pension Grant 0 0 Total Taxation & Non Specific Grant Income 0 0 Deficit for the year 130,819 104,520 (Surplus) on Revaluation of Non-Current Assets 0 0 Remeasurement of the net defined benefit liability 481,936 (549,849) Total Comprehensive Income and Expenditure 612,755 (445,329)

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The Balance Sheet

31 March 2015 Notes

31 March 2016

£000 £000

Property, Plant & Equipment

0 Land and Buildings 0

0 Vehicles, Plant & Equipment 0

0 Assets under Construction 0

0 Surplus Assets 0

0 Heritage Assets 0

0 Investment Properties 0

Intangible Assets

0 Software 0 0 0

Long Term Investments 0 Non Property Investments 0 0 Long Term Debtors 0 0 Total Long Term Assets 0

0 Short Term Investments 0 0 Inventories 0 0 Short Term Debtors 0 0 Cash & Cash Equivalents 0 0 Assets Held for Sale 0 0 Total Current Assets 0

(2,583) 5 Short Term Creditors (2,520)

0 Provisions falling due within one year 0

(2,583) Total Current Liabilities (2,520)

0 Long Term Creditors 0 0 Provisions falling due after one year 0

Other Long Term Liabilities (3,424,802) 6 Police Officer & Police Staff Pension Liability (2,979,534)

(3,424,802) Total Long term Liabilities (2,979,534)

(3,427,385) Net Assets (2,982,054)

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31 March 2015 Notes

31 March 2016

£000 £000

Usable Reserves

0 General Fund 0 0 Earmarked Revenue Reserves 0 0 Capital Reserve 0 0 Capital Contributions Unapplied Reserve 0 0 Insurance Fund 0

0 Total Usable Reserves 0

Unusable Reserves

0 Revaluation Reserve 0 (3,424,802) 14 Pensions Reserve (2,979,534)

0 Capital Adjustment Account 0 0 Financial Instruments Adjustment Account 0 0 Collection Fund Adjustment Account 0

(2,583) 16 Short Term Accumulated Compensated Absences Account (2,520)

(3,427,385) Total Unusable Reserves (2,982,054)

(3,427,385) Total Reserves (2,982,054)

These financial statements replace the unaudited financial statements certified by Paul Curtis, Chief Finance Officer for Kent Police on 10th June 2016.

I confirm that the Chief Constable for Kent Police approved these accounts. Paul Curtis, Chief Finance Officer for the Chief Constable for Kent Police 12th August 2016 .

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The Cash Flow Statement The Cash flow Statement shows the changes in cash and cash equivalents of the Chief Constable during the reporting period. All cash and cash equivalents are held by the PCC and therefore there are no entries in this statement.

Cash Flow Statement for Kent Chief Constable for Ke nt

2014/15 2015/16

£’000’s £’000’s

Net (surplus) or deficit on the provision of services 130,819 104,520

Adjustments to net surplus or deficit on the provision of services for non-cash movements (Note 7)

(130,819) (104,520)

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

0 0

Net Cash flows from Operating Activities 0 0

Investing Activities 0 0

Financing Activities 0 0

Net increase or decrease in cash and cash equivalen ts 0 0

Cash and cash equivalents at the beginning of the reporting period 0 0

Cash and cash equivalents at the end of the reporti ng period 0 0

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The Movement in Reserves Statement This statement shows the movement in year on the different reserves held by Kent Police, analysed into 'useable' (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves.

CC Statement 2015/16 General

Fund

Capital Receipts &

Contributions Reserves

Earmarked Reserves

TOTAL USEABLE

RESERVES

TOTAL UNUSABLE RESERVES

TOTAL RESERVES

£'000's £'000's £'000's £'000's £'000's £'000's BALANCE AS AT 1st APRIL 2015 0 0 0 0 (3,427,385) (3,427,385) Surplus / (Deficit) on the Provision of Services on an accounting basis (104,520) 0 0 (104,520) 0 (104,520) Other Comprehensive Income & Expenditure 0 0 0 0 549,849 549,849 TOTAL COMPREHENSIVE INCOME & EXPENDITURE (104,520) 0 0 (104,520) 549,849 445,331 Adjustments between accounting basis and funding basis under regulations (Note 15) 104,520 0 0 104,520 (104,520) 0 Net increase / decrease before transfers to Earmarked Reserves 0 0 0 0 445,331 445,331 Transfer to / from Earmarked Reserves 0 0 0 0 0 0 Increase / (Decrease) in the year 0 0 0 0 445,331 445,331

BALANCE AS AT 31ST MARCH 2016 0 0 0 0 (2,982,054) (2,982,054)

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CC Statement 2014/15 General

Fund

Capital Receipts &


Earmarked Reserves

TOTAL USEABLE

RESERVES


TOTAL RESERVES

£'000's £'000's £'000's £'000's £'000's £'000's BALANCE AS AT 1st APRIL 2014 0 0 0 0 (2,814,630) (2,814,630) Surplus / (Deficit) on the Provision of Services on an accounting basis (130,819) 0 0 (130,819) 0 (130,819) Other Comprehensive Income & Expenditure 0 0 0 0 (481,936) (481,936) TOTAL COMPREHENSIVE INCOME & EXPENDITURE (130,819) 0 0 (130,819) (481,936) (612,755) Adjustments between accounting basis and funding basis under regulations (Note 15) 130,819 0 0 130,819 (130,819) 0 Net increase / decrease before transfers to Earmarked Reserves 0 0 0 0 (612,755) (612,755) Transfer to / from Earmarked Reserves 0 0 0 0 0 0 Increase / (Decrease) in the year 0 0 0 0 (612,755) (612,755)

BALANCE AS AT 31ST MARCH 2015 0 0 0 0 (3,427,385) (3,427,385)

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Notes to the Accounts for the Chief Constable of Ke nt Note 1 – Accounting Policies i. General Principles

The Statement of Accounts summarises the Chief Constable for Kent’s transactions for the 2015/16 financial year and its position at the year-end of 31 March 2016 subject to the notes below. The Accounts and Audit Regulations 2011 require the Chief Constable for Kent to prepare an annual Statement of Accounts in accordance with proper accounting practices. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2015/16 and the Service Reporting Code of Practice (SERCOP) 2015/16, supported by International Financial Reporting Standards (IFRS). The accounting convention adopted in the Statement of Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments. The Going Concern basis is also assumed. At midnight on the 21st November 2012 all property, rights, assets and liabilities which previously belonged to the Kent Police Authority were transferred to the Police and Crime Commissioner for Kent (PCC). This includes all property, plant, and equipment and income. The Chief Constable’s Accounts show all expenditure related to the delivery of policing services for the year including staff costs, pension costs and the provision for short term compensated absences whilst the PCC’s Single Entity Accounts only show those costs directly related to the Office of the Police and Crime Commissioner. The Chief Constable of Kent has direct control of all Police Officers, PCSOs and all Police Staff except those working in the Office of the Police and Crime Commissioner. Although the employment contracts for all staff are held by the PCC the substance of the relationship is that the Chief Constable who has the effective power to control how these resources are deployed and used. Whether posts are recruited if they become vacant, whether posts can be made redundant or where posts can be located and what roles are assigned to them are also decisions within the control of the Chief Constable. Included within staff costs are the IAS 19 pension costs for Officers and staff and also any short-term compensated absences such as the provision for payment of outstanding annual leave and time off in lieu balances at the year-end date. These costs follow the rest of the pay related costs and therefore logically sit with the Chief Constable. The Chief Constable’s Accounts therefore include staff costs for the above groups of employees only. As stated above all contracts and bank accounts are held by the Police and Crime Commissioner. All economic benefits arising from any transaction also falls to the PCC so all costs and income are held with the PCC. The Chief Constable is unable to enter into borrowing arrangements so costs such as the PFI contracts and any leasing arrangements must be held by the PCC. As stated above all property plant and equipment is in the ownership of the Police and Crime Commissioner. Decisions around the amount of resources available for investing in capital activities are made by the Police and Crime Commissioner as are decisions around disposals. The PCC agrees the five year capital programme and monitors expenditure against it throughout the year. Only salary transactions for Police Officers, PCSOs and all staff (other than those directly working in the Office of the Police and Crime Commissioner) are shown in the Accounts of the Chief Constable. All other transactions are shown in the PCC Accounts. i. Accruals of Expenditure Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. iii. 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 Chief Constable for Kent’s financial performance.

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iv. 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 the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the Chief Constable for Kent’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. v. 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 (e.g. cars) for current employees and are recognised as an expense for services in the year in which employees render service to the Chief Constable for Kent. 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 made at the wage and salary rates applicable in the following accounting year, being the period in which the employee takes the benefit. The accrual is charged to Surplus or Deficit on the Provision of Services, but then reversed out through the intra-group transfer from the Police and Crime Commissioner for Kent’s Accounts. Short-term compensated absences are those periods in which an employee does not provide services to the employer but continues to be paid. Compensated absences may be accumulating or non-accumulating. Accumulating absences are those that are carried forward and can be used in future periods if the current entitlement is not used in full. For Kent Police this includes annual leave, flexi-leave and time off in lieu. Accumulating absences may be vesting or non-vesting. Where vesting, employees who leave are entitled to a cash payment in respect of any unused entitlement; where non-vesting, benefits lapse if an employee leaves before the vesting date. For Kent Police vesting accumulated short term compensated absences are annual leave and time off in lieu only. Flexi-time is non-vesting. Short term accumulating compensated absences shall be: • Recognised when employees render services that increases their entitlement to future compensated absences • Measured as the additional amount that Chief Constable for Kent expects to pay as a result of unused entitlement that has accumulated at the Balance Sheet date including associated employer’s national insurance contributions. Termination Benefits Termination benefits are amounts payable as a result of a decision by the Police and Crime Commissioner for Kent or the Chief Constable for Kent to terminate an employee’s contract before the normal retirement date or an officer’s decision to accept voluntary redundancy and are charged on an accruals basis to overheads in the Comprehensive Income and Expenditure Statement. Termination benefits are recorded in the accounts when Kent Police have confirmed and communicated their decision to the termination of the employment of an individual or group of individuals or making an offer to encourage voluntary redundancy. Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund balance to be charged with the amount payable by Kent Police 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.

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Post-Employment Benefits Kent Police participates in three different types of pension schemes for police officers and a single scheme for police staff. Post employee benefits are associated with the Kent Police Group and Chief Constable’s Accounts, they do not materially affect the accounts of the Single Entity for the Police and Crime Commissioner for Kent. • The Police Pension Scheme (PPS), governed by the Police Pensions Regulations 1987 (as amended). • The New Police Pension Scheme (NPPS), regulated under the Police Pension Regulations 2006. • The 2015 Scheme, regulated under the Police Pension Regulations 2015 • The Local Government Pensions Scheme, administered by Kent County Council. As a results of changes in requirements under International Accounting Standard 19 (IAS19) the net pensions liability is analysed into several components: • Service cost – comprising: o current service cost being the increase in liabilities as a result of years of service earned this year – allocated in the Comprehensive Income and Expenditure Statement to the services for which the employees worked; o past service cost – the increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years – debited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part of Non Distributed Costs; o gains or losses on settlements and curtailments – the result of actions to relieve Kent Police of liabilities or events that reduce the expected future service or accrual of benefits of employees – debited or credited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part of Non Distributed Costs; • Interest cost – the expected increase in the present value of liabilities during the year as they move one year closer to being paid – debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement; • Re-measurement of the net defined benefit liability – comprising: o expected return on assets – the annual investment return on the fund assets attributable to Kent Police, based on an average of the expected long-term return – credited to the Pension Reserve; o actuarial gains and losses arising on changes in demographic assumptions– changes in the net pensions liability that arise because experience has not reflected the demographic assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions – debited to the Pensions Reserve; o actuarial gains and losses arising on changes in financial assumptions– changes in the net pensions liability that arise because experience has not reflected the financial assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions – debited to the Pensions Reserve; • contributions paid to the pension fund – cash paid as employer’s contributions to the pension fund in settlement of liabilities; not accounted for as an expense. In relation to retirement benefits, statutory provisions require the General Fund balance to be charged with the amount payable by Kent Police to the pension fund or directly to 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 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. Police Pension Schemes All police schemes are contributory occupational pension schemes with officers making varying levels of contributions dependent on their salary level. Contributions to both the old and new police pension schemes have three tiers as follows:

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Salary Level

1987 Scheme 2006 Scheme CARE 2015 Scheme (wef 1st April 2015)

2015/2016 (2014/2015) % Contribution Rate


2015/2016 (2014/2015)

% Contribution Rate

£0 to £27,000 pa 14.25% (14.25%) 11.00% (11.00%) 12.44% (n/a)

£27,000 to £59,999 pa 14.25% (14.25%) 12.05% (12.05%) 13.44% (n/a)

£60,000 pa or more 15.05% (15.05%) 12.75% (12.75%) 13.78% (n/a)

The Police Pension Account was set up on 1st April 2006 to administer all police pension schemes. The police pension schemes are defined benefit schemes (without managed pension assets). The employer’s contribution for each serving officer is common to all schemes at 21.3% of pensionable pay. This is set nationally and is subject to a three yearly review. Accrued net pension liabilities have been assessed on an actuarial basis in accordance with IAS 19. The net liability and a pensions reserve incorporating all pension schemes have been recognised in the Balance Sheet, as have entries in the Comprehensive Income and Expenditure Account for movements in the asset / liability relating to the defined benefit schemes. Transfers into and out of the schemes representing joining and leaving the police are recorded on a cash basis in the Pension Account as a result of the time taken to finalise the sums involved. The liabilities of the police pension schemes attributable to Kent Police are included in the Balance Sheet on an actuarial basis using the projected unit method i.e. and assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates and projections of earnings for current employees. Liabilities as well as anticipated gains and losses are discounted to their value at current prices using a discount rate prescribed by the Funds’ Actuaries. The Local Government Pension Scheme The Local Government Pension Scheme is a contributory occupational pension scheme with police staff making contributions in accordance with the table below dependent on their salary level.

Salary Level LGPS

Rate up to 31st March 2016

%

Up to £13,600 pa 5.5

£13,601 to £21,200 pa 5.8 £21,201 to £34,400 pa 6.5 £34,401 to £43,500 pa 6.8 £43,501 to £60,700 pa 8.5 £60,701 to £86,000 pa 9.9

£86,001 to £101,200 pa 10.5 £101,201 to £151,800 pa 11.4

More than £151,801 pa 12.5 The Local Government Scheme is accounted for as a defined benefits scheme. The liabilities of the pension fund attributable to Kent Police are included in the Balance Sheet on an actuarial basis using the projected unit method – i.e. an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, and projections of projected earnings for current employees.

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Liabilities are discounted to their value at current prices. The assets of the pension fund attributable to Kent Police are included in the Balance Sheet at their fair value: • quoted securities – current bid price • unquoted securities – professional estimate • unitised securities – current bid price • property – market value. Discretionary Benefits Kent Police 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. vi. 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 reporting period – the Statement of Accounts is adjusted to reflect such events; • those that are indicative of conditions that arose after the reporting period – the Statement of Accounts is not adjusted to reflect such events, but where a category of events would have a material effect, disclosure is made in the notes of the nature of the events and their estimated financial effect.

Events taking place after the date of authorisation for issue are not reflected in the Statement of Accounts. vii. Overheads and Support Services The costs of overheads and support services are charged to those that benefit from the supply or service in accordance with the costing principles of the CIPFA Service Reporting Code of Practice 2015/16 (SERCOP). The total absorption costing principle is used – the full cost of overheads and support services are shared between users in proportion to the benefits received. As all staff with support services functions are under the direction and control of the Chief Constable for Kent these costs have been apportioned primarily to the service headings in the Net Cost of Services. As these services provide support to the Office of the Police and Crime Commissioner also a much small proportion has been allocated to the PCC. These apportionments are based on head-count. viii. VAT VAT payable is included as an expense only to the extent that it is not recoverable from Her Majesty’s Revenue and Customs. VAT receivable is excluded from income. Note 2 - Assumptions Made about the Future and Othe r Major Sources of Estimation Uncertainty The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However the nature of estimation means that actual outcomes could differ from those estimates. The key judgements and estimation uncertainty that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities in the next financial year are listed below: Police Pension Schemes The range of sensitivities regarding the principal assumptions used to measure the combined Police Pension Schemes’ liabilities are set out below:

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Police Pension Scheme (Schemes Combined)

Sensitivity analysis £’000’s £’000’s £’000’s

Adjustment to discount rate 0.50% 0.00% -0.50%

Present value of total obligation 2,572,200 2,846,900 3,121,600

Projected service cost 51,610 56,300 60,990

Adjustment to member life expectancy +1 year None -1 Year



Adjustment to salary increase rate 0.50% 0.00% -0.50%



Adjustment to pension increases and deferred revaluation 0.50% 0.0% -0.50%



Local Government Pension Scheme The sensitivities regarding the principal assumptions used to measure the Local Government Pension Scheme are set out below:



Present value of total obligation 442,619 452,226 462,048











Note 3 – Events After the Balance Sheet Date No events to report after balance sheet date.

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Note 4 – Contingent Liabilities The Chief Constable of Kent along with other Chief Constables and the Home Office, currently have various claims lodged against them with the Central London Employment Tribunal. The claims are in respect of alleged unlawful discrimination arising from the Transitional Provisions in the Police Pension Regulations 2015. The exact number of current claims is a moot point as any success would inevitably apply to all similarly affected officers who have filed a claim or not. The Tribunal is unlikely to consider the substance of the claims until 2017. Legal advice suggests that there is a strong defence against these claims. The quantum and who will bear the cost is also uncertain if the claims are partially or fully successful and therefore at this stage it is not practicable to estimate the financial impact. For these reasons, no provision has been made in the 2015/16 Accounting Statements. Note 5 – Short Term Creditors

31st March 2015 31st March 2016

£’000’s £’000’s

Short Term Compensated Absences 2,583 2,520

Total 2,583 2,520

Note 6 – Net Pensions Liability


£’000’s £’000’s

Pension Liability 3,424,802 2,979,534

Total 3,424,802 2,979,534

See note 14 for further detailed explanations. Note 7 – Cash Flow Statement

Adjustments to net surplus / deficit on the provisi on for non-cash movements

2014/15 2015/16

CC CC

£’000’s £’000’s

(Increase) / decrease in creditors 216 61

Pensions liability (131,035) (104,581)

Total (130,819) (104,520)

Note 8 - Amounts Reported for Resource Allocation D ecisions

The analysis of income and expenditure by service on the face of the Comprehensive Income and Expenditure Statement is that specified by the Service Reporting Code of Practice. However, decisions about resource allocation are taken by the Kent Chief Officer Team on the basis of budget reports analysed across directorates, with the exception of the Police & Crime Commissioners budget which is managed entirely within the Office of the PCC. These reports are prepared on a different basis from the accounting policies used in the financial statements. In particular:

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• no charges are made in relation to capital expenditure (whereas depreciation, revaluation and impairment losses in excess of the balance on the Revaluation Reserve and amortisations are charged to services in the Comprehensive Income and Expenditure Statement). • the cost of retirement benefits is based on cash flows (payment of employer’s pensions contributions) rather than current service cost of benefits accrued in the year. • expenditure on some support services is budgeted for centrally and not charged to directorates. The following tables show expenditure for Kent Police for the financial years 2015/16 and 2014/15, analysed subjectively and grouped based on operational policing units or directorates. This information is reported to the Chief Officer team on a month by month basis and used to inform resource allocation and other strategic decisions. The Force is organised into three geographical areas, North, West and East Divisions which undertake Neighbourhood Policing functions whilst incident management functions is centralised.

31

Income & Expenditure as reported to senior manageme nt for the period 1 st April 2015 to 31 st March 2016

Central Ops Chief's Office

DCC Portfolio Divisions Joint SCD

Joint Support Services

Local Policing &

Partnership

Corporate Charges

Force Total

£’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s

Police Officer Pay 39,085 1,829 1,079 95,875 12,077 9,462 3,754 200 163,361

Police Officer Overtime 4,343 5 2 1,170 117 34 6 3 5,680

Other Staff Costs 11,928 555 5,206 12,808 8,759 14,878 14,300 59 68,493

Other Staff Overtime 548 0 59 32 140 106 165 2 1,052

Total Expenditure 55,904 2,389 6,346 109,885 21,093 24,480 18,225 264 238,586


Central Ops Chief's Office

DCC Portfolio Divisions Joint SCD

Joint Support Services

Local Policing &

Partnership

Corporate Charges

Force Total

£’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s

Police Officer Pay 45,699 1,865 938 91,042 12,278 9,957 4,011 19 165,810

Police Officer Overtime 3,932 6 4 1,246 149 46 28 5 5,416

Other Staff Costs 13,104 729 5,262 12,756 9,903 15,487 13,940 141 71,322

Other Staff Overtime 317 1 53 53 136 142 369 68 1,139

Total Expenditure 63,052 2,601 6,256 105,098 22,466 25,632 18,348 234 243,687

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Reconciliation to the Comprehensive Income and Expe nditure Statement

2014/15 2015/16

Amount reported in note 8 above 243,687 238,586

Reimbursed Services - Inter Force Salary Recharges (Sit in PCC) 0 5,924

Short term accumulated compensated absences (216) (63)

Pension – IAS19 82,519 79,937

Superannuation Uniformed (26,443) (40,673)

Superannuation Non-uniformed (6,291) (7,159)

Police Officer Injury/Ill health/Death Pensions 0 5,898

Childcare Vouchers 0 (39)

Net Cost of Policing Services 293,257 282,411

33

Note 9 - Officers’ Remuneration Regulation 4 of the Accounts and Audit Regulations 2009 places a specific requirement on the Chief Constable of Kent to disclose the number of employees whose taxable remuneration falls within certain brackets. Accordingly the number of employees whose remuneration, excluding pension contributions was £50,000 or more in bands of £5,000 was:

Remuneration Band (£)

Number of Employees

2014/15 2015/16

Chief Chief

50,000 – 54,999 164 186

55,000 – 59,999 114 121

60,000 – 64,999 34 27

65,000 – 69,999 12 13

70,000 – 74,999 4 10

75,000 – 79,999 9 6

80,000 – 84,999 11 5

85,000 – 89,999 3 5

90,000 – 94,999 2 1

95,000 – 99,999 2 1

100,000 – 104,999 0 1

105,000 – 109,999 0 1

110,000 – 114,999 1 0

115,000 – 119,999 0 2

125,000 – 129,999 1 0

135,000 – 139,999 0 1

140,000 – 144,999 1 0

145,000 – 149,999 0 1

150,000 – 154,999 1 0

195,000 - 199,000 1 0

200,000 - 204,999 0 1

34

The amended Regulations introduce a requirement to disclose individual remuneration details for senior employees whose salary is £50,000 or more per year. For these employees their salaries are listed individually by way of job title. Additionally persons whose salary is £150,000 or more per year must be identified by name. A senior employee is considered one whose salary is greater than £50,000 per year (calculated pro rata for part time employees) and who is responsible for the management of Kent Police to the extent that the person has power to control the major activities of the service, in particular activities involving the expenditure of money, whether solely or collectively with other persons. This includes all Association of Chief Police Officer (ACPO) ranking police officers, the Director of Essex and Kent Support Services, the Director of Human Resources and the Force Chief Finance Officer. These individuals have also been accounted for under the remuneration band table above.

2015/16

Post Title Note Salary

including allowances

Perf’nce. Related

Pay

Expenses Allowances

Other Payments

(Police Staff)

Benefits in kind

Other Payments

(Police Officers

only)

Total remuneration (excl pension contributions)

Pension contributions

Total remuneration

(including pension

contributions)

Chief Constable, Mr Alan Pughsley

196,089 0 0 0 0 5,090 201,179 0 201,179

Deputy Chief Constable 147,936 0 0 0 0 0 147,936 0 147,936

Assistant Chief Constable (Serious Crime Directorate)

1 0 0 0 0 0 0 0 0 0

Assistant Chief Constable (Central Operations)

119,392 0 0 0 0 0 119,392 22,706 142,098

Assistant Chief Constable (Local Policing & Partnerships)

2 119,230 0 0 0 0 0 119,230 21,197 140,427


3 7,622 0 0 0 0 0 7,622 1,541 9,163

Chief Finance Officer to the Chief Constable 84,861 0 0 0 0 0 84,861 9,217 94,078

Director of Human Resources 4 30,879 0 0 0 0 0 30,879 3,582 34,461

Director of Corporate Services 4 85,829 0 0 0 0 0 85,829 9,956 95,785

Director of Essex & Kent Support Services 145,225 0 0 0 0 0 145,225 16,846 162,071

Director of Corporate Communications

5 19,532 0 0 0 0 0 19,532 2,266 21,798

35

Notes 1. Assistant Chief Constable (Serious Crime Directorate) is employed by Essex Police and is in a 50:50 role. 1st Assistant Chief Constable left the post on

30th October 2015, followed by the current Assistant Chief Constable starting the post from 30th October 2015. 2. Assistant Chief Constable (Local Policing & Partnership Directorate) retired on 1st March 2016. 3. Started in the post of Assistant Chief Constable (Local Policing & Partnership Directorate) on 29th February 2016. 4. Director of Human Resources transferred in the new post as Director of Corporate Services on 6th July 2015 following restructure of Human Resources

department. 5. Started in the post of Director of Corporate Communications on 1st February 2016.

36

2014/15



Perf’nce. Related

Pay

Expenses Allowances

Other Payments

(Police Staff)

Benefits in kind

Other Payments

(Police Officers

only)



Total remuneration

(including pension

contributions)


194,215 0 0 0 0 4,508 198,723 37,175 235,898

Deputy Chief Constable, Mr Paul Brandon

150,473 0 0 0 0 0 150,473 31,649 182,122


1 0 0 0 0 0 0 0 0 0

T/Assistant Chief Constable (Central Operations)

2 19,070 0 0 0 0 2,257 21,328 4,456 25,783


3 89,992 0 0 0 0 0 89,992 19,600 109,592


123,311 0 0 0 0 0 123,311 25,530 148,841

Chief Finance Officer to the Chief Constable

82,964 0 0 0 0 0 82,964 9,170 92,134

Director of Human Resources 115,550 0 0 0 0 0 115,550 13,404 128,954

Director of Essex & Kent Support Services

143,786 0 0 0 0 0 143,786 16,679 160,465

Notes

1. Assistant Chief Constable (SCD) is employed by Essex Police but works across both Kent and Essex. 2. Temporary Assistant Chief Constable (Central Operations) retired from Kent Police on 10th June 2014. 3. Assistant Chief Constable (Central Operations) joined Kent Police on 26th May 2014.

37

Note 10 - External Audit Costs In 2015/16 the following fees were incurred relating to external audit and inspection, carried out by our appointed external auditors, Ernst & Young.

2014/15 2015/16

£’000’s £’000’s

Fees payable in respect to External Audit Fees 31 19

Total 31 19

An additional amount of £1,838 was paid to Ernst & Young in respect of additional audit effort in 2014/15. Note 11 - Related Parties The Chief Constable for Kent Police is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the authority or to be controlled or influenced by Kent Police. Disclosure of these transactions allows readers to assess the extent to which the Chief Constable might have been constrained in their ability to operate independently or might have secured the ability to limit another party’s ability to bargain freely with the Chief Constable. Central Government Central government has effective control over the general operations of the Chief Constable of Kent – it is responsible for providing the statutory framework within which the Chief Constable operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the Kent Police has with other parties (e.g. council tax bills). Officers The Kent Police Chief Officer team lead by the Chief Constable has direct control over all operational decisions and the day-to-day running of Kent Police as well strategic decision making in conjunction with the Commissioner. All Chief Officers have been contacted and there are no related party transactions to disclose for 2015/16. Other Public Bodies Through the Police and Crime Commissioner for Kent, Kent Police has a number of business relationships with public organisations such as local authorities in Kent and other Police Forces in England and Wales mainly Kent County Council, Essex Police and West Yorkshire Police for the National Police Air Service (NPAS). Kent Police has two main collaborative agreements with Essex Police covering Serious Crime and Support Services. Jointly Controlled Operations are further explained in note 39 in the Kent Police Group Accounts. Police and Crime Commissioner The Chief Constable for Kent and Police and Crime Commissioner for Kent are separate legal entities as described in the Narrative report. Despite this the two entities are intrinsically linked with the PCC for Kent holding all bank accounts, assets, liabilities and reserves for both entities. The Chief Constable for Kent has a budget approved by the Commissioner with any underspends against that budget transferring back to the PCC at the end of the financial year. As such the Police and Crime Commissioner for Kent is described as a related party.

38

Note 12 - Termination Benefits At 31st March 2016 Kent Police is one year into a four year restructure affecting both Police Officers and Staff across the organisation. This follows Government announcements in the Budget of significant funding reductions to the Police Service over a four years period, ending in March 2020. In order to meet the challenge of a reduced budget the Police and Crime Commissioner and Chief Officer team agreed to embark on a rigorous review of all services. This review recommended a reduction in staff numbers over the four years whilst maintaining front-line services where possible. Despite the stated objective of managing these reductions through natural wastage as people voluntarily leave the organisation there has been redundancy amongst police staff. Kent Police terminated the contracts of some employees in 2015/16, incurring costs of £1.352m (£0.162m in 2014/15). These payments were made to staff made redundant mostly on a voluntary basis, as part of the Kent Police rationalisation of the service. Payments were made to staff in accordance with Kent Police policy L1280, available on the Kent Police website, https://www.kent.police.uk/policy/human-resources-policies/l1280-employment-security-and-redeployment/ and are calculated on a combination of age, length of service and pay scale of the employee at the time of their leaving the organisation. The following table shows the number of people leaving the organisation through redundancy in bands of £20,000.

Cost to Kent

Police

2014/15 2015/16

Number of

people

Redundancy Cost

Pension Cost Total Number

of people

Redundancy Cost

Pension Cost Total

£’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s

0 – 20 8 62 0 62 52 460 46 506

20 – 40 4 100 0 100 17 334 129 463

40 – 60 0 0 0 0 4 113 56 169

60 – 80 0 0 0 0 2 55 77 132

80 – 100 0 0 0 0 1 54 27 81 Note 13 - Date of Authorisation of the Statement of Accounts for Issue The Statement of Accounts was authorised for issue on 12th August 2016 by Mr Paul Curtis, Chief Finance Officer to the Chief Constable of Kent Police. Note 14 - Defined Benefit Pension Schemes Transactions Relating to Retirement Benefits The Chief Constable recognises the cost of retirement benefits in the Net Cost of Services when they are earned by employees, rather than when the benefits are eventually paid as pensions. The charge the Chief Constable is required to make which affects the Council Tax however, is based on the cash payable in the year and therefore the real cost of retirement benefits is reversed out of the Comprehensive Income and Expenditure Statement. The following transactions have been made in the Chief Constable’s accounts during the year.

39

Police Officer Pension Schemes

Police Pension Scheme (Combined)

2014/15 2015/16

£’000’s £’000’s

Comprehensive Income & Expenditure Statement

Cost of Services:

Current service cost 68,400 61,700

Past service cost / (gain) 300 400

Effect of settlements 0 0

Financing & investment Income & Expenditure:

Interest income on plan assets 0 0

Interest costs on defined benefit obligations 117,000 104,800

Impact of Asset Ceiling on net interest 0 0

Total post employment benefit charged to the (surpl us) / deficit on the Provision of Services 185,700 166,900

Other post employment benefit charged to the Compre hensive Income & Expenditure Statement:

Actuarial losses (gains) arising from change in demographic assumptions 0 (9,100)

Actuarial losses (gains) arising from change in financial assumptions 431,100 (337,500)

Other experience 4,700 (169,500)

Total post employment benefit charged to the Compre hensive Income & Expenditure Statement 621,500 (349,200)

Movement in Reserves Statement

Reversal of net charges made to the (surplus) / deficit on the Provision of Services for post employment benefits

(185,700) (166,900)

Actual amount charged to against the General Fund f or Pensions in the year

Actuarial Contributions to Fund 65,300 78,000

40

Assets and Liabilities in Relation to Retirement Be nefits

The following table reconciles the present values of the liabilities of the police pension schemes: Reconciliation of Present Value of the Scheme Liabi lities (Defined Benefit Obligation)


2014/15 2015/16

£’000’s £’000’s

Benefit obligation at start of year 2,717,900 3,274,100

Current Service Cost 68,400 61,700

Interest on Pension Liabilities 117,000 104,800

Actuarial losses/ (gains) 435,800 (516,100)

Contributions by scheme participants 15,400 14,900

Past Service Gains 300 400

Benefits paid / (received) (80,400) (91,500)

Transfers in from / (out to) other authorities (300) (1,400)

Benefit obligation at end of year 3,274,100 2,846,900 Reconciliation of the Movements in the Fair Value o f the Scheme Assets


2014/15 2015/16

£’000’s £’000’s

Opening Fair Value of Assets 0 0

Expected return on assets 0 0

Actuarial gains (losses) on assets 0 0

Contributions by employer 65,300 78,000

Contributions by participants 15,400 14,900


Net benefits paid out (80,400) (91,500)

Closing Fair Value of Assets 0 0 Pensions Assets and Liabilities Recognised in the B alance Sheet


2014/15 2015/16

£’000’s £’000’s

Present value of Police Pension Scheme defined benefit obligation 3,274,100 2,846,900

Fair value of assets in the Police Pension Scheme 0 0

3,274,100 2,846,900 Net Liability arising from the defined benefit obligation 3,274,100 2,846,900

41

Basis for Estimating Assets and Liabilities (PPS)

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 Police Pension Schemes has been assessed by Hymans Robertson LLP, an independent firm of actuaries. The principal assumptions used in their calculations have been:


2014/15 2015/16

Mortality assumptions: Longevity at 65 (60 for Police Officers) for current pensioners:

Men 29.5 29.7

Women 31.7 31.6 Longevity at 65 (60 for Police Officers) for future pensioners:

Men 31.1 31.2

Women 33.2 33.2

Rate of inflation (RPI)

N/A

3.20%

Rate of increase in salaries 3.20%

Rate of increase on pensions 2.20%

Rate of discounting for scheme liabilities 3.50% Take up of option to convert annual pension into retirement lump sum

90.00%

The Police Pension scheme has no assets to cover its liabilities. The liabilities show the underlying commitments that the Police and Crime Commissioner has in the long term to pay retirement benefits. The total liability of £2,847m (£3.274m – 2014/15) has a substantial impact on the net worth of the Police and Crime Commissioner as recorded in the Balance Sheet. Statutory arrangements for funding the deficit however, mean that the financial position of the Police and Crime Commissioner remains healthy. Police Pensions are charged to the Police Pension Fund Account and any shortfall between the value of pensions paid in the year and the receipts into the Account from the employer and employee contributions is funded from the General Fund. A top-up grant from the Government is then claimed to cover the deficit or, in the event of a surplus, repaid to the Government.

42

Local Government Pension Scheme


2014/15 2015/16

£’000’s £’000’s Comprehensive Income & Expenditure Statement

Service Cost



(Gain) / Loss on curtailments & settlements 0 0


Interest costs 16,720 15,725

Expected return on assets in the scheme (12,654) (10,712)

Administration Expenses 210 217 Total post employment benefit charged to the (surplus) / deficit on the Provision of Services 17,885 22,850

Other Post -employment Benefits charged to the Comprehensive Income and Expenditure Statement

Return on plan assets (excluding amount included in net interest expense) 18,731

(7,290)

Actuarial (losses) gains arising from demographic assumptions 0

0

Actuarial (losses) gains arising from financial assumptions (64,851)

41,010

Experience (losses) gains (16) 29

Other 0 0 Total post employment benefit charged to the Comprehensive Income & Expenditure Statement (28,251) 56,599

Movement in Reserves Statement Reversal of net charges made to the (surplus) / deficit on the Provision of Services for post employment benefits

(17,885) (22,850)

Actual amount charged to against the General Fund for Pensions in the year

Employers contribution payable to the scheme 7,251 7,169

The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed asset investments are based on gross redemption yields 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 £3.422m (£31.385m - 2014/15).

43

Pensions Assets and Liabilities Recognised in the B alance Sheet


2014/15 2015/16

£’000’s £’000’s

Present value of liabilities

Local Government Pension Scheme (462,313) (450,224)

Fair value of assets in the Local Government Pension Scheme

313,801 319,592

S/T (148,512) (130,632)

Other movements in the liability /(asset) 0 0

Net liability arising from defined benefit obligation


Total (150,702) (132,634)

Reconciliation of Present Value of the Scheme Liabi lities The following tables reconcile the present value of liabilities and assets of the Local Government Pension Scheme attributable to the Police and Crime Commissioner:


2014/15 2015/16 £’000’s £’000’s

Balance bought forward 373,731 464,503


Interest cost 16,720 15,725


Remeasurement (Gains) and Losses

Actuarial Gains / Losses arising from changes in demographic assumptions

0 0

Actuarial Gains / Losses arising from changes in financial assumptions 64,851 (41,010)

Experience (Gains)/Losses on defined benefit obligation 16 (29)

Past service costs 0 619

Losses/(Gains) on curtailments 0 0

Liabilities assumed on entity combinations

Benefits paid / transfers paid (8,027) (8,141)

Liabilities extinguished on settlements

Unfunded pensions payments (168) (162)

Balance carried forward 464,503 452,226

44

Local Government Pension Scheme Assets The Local Government Pension Scheme’s assets consist of the following categories, by proportion of the total assets held:


£’000’s % £’000’s %

Equities 214,447 68 213,128 66

Gilts 3,282 1 2,831 1

Other Bonds 34,905 11 35,091 11

Property 38,980 12 46,425 15

Cash 8,581 3 8,229 3

Target Return Portfolio 13,606 4 13,888 4

Total 313,801 100 319,592 100

Reconciliation of the Movements in Fair Value of Sc heme Assets


2014/15 2015/16

£’000’s £’000’s

Opening fair value of the scheme assets 279,799 313,801

Interest Income 12,654 10,712

Remeasurement gain / (loss)

Expected return on assets 18,731 (7,290)

Other 0 0

The effect of changes in foreign exchange rates 0 0

Employer contributions 7,251 7,169

Contributions by employees into the scheme 3,771 3,720

Benefits paid (8,195) (8,303)

Other (210) (217)

Closing fair value of scheme assets 313,801 319,592

Basis for Estimating Assets and Liabilities (LGPS) 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 Pension Scheme (LGPS) liabilities have been assessed by Barnett Waddingham, an independent firm of actuaries. Estimates for the LGPS scheme are based on the latest full valuation of the scheme as at 31 March 2016.

45

The principal assumptions used in their calculations have been:


2014/15 2015/16

£’000’s £’000’s

Mortality assumptions: Years Years Longevity at 65 (60 for Police Officers) for current pensioners:

Men 22.8 22.9

Women 25.2 25.3 Longevity at 65 (60 for Police Officers) for future pensioners:

Men 25.1 25.2

Women 27.6 27.7

% %

Rate of inflation (RPI) 3.30% 3.40%

Rate of inflation (CPI) on which Pensions are based 2.50% 2.50%

Rate of increase in salaries 4.30% 4.30%

Rate of increase on pensions 2.50% 2.50%

Rate of discounting for scheme liabilities 3.40% 3.80%

Take up of option to convert annual pension into retirement lump sum

50.00% 50.00%

Local Government Pension Scheme The liabilities show the underlying commitments that the Police and Crime Commissioner has in the long term to pay retirement benefits. The total liability of £132.634m has a substantial impact on the net worth of the Police and Crime Commissioner as recorded in the Balance Sheet. Statutory arrangements for funding the deficit however, mean that the financial position of the Police and Crime Commissioner remains healthy. The deficit on the Local Government Scheme will be made good by increased contributions over the remaining working life of employees, as assessed by the scheme actuary.

46

Note 15 – Adjustments between Accounting Basis and Funding Basis under Regulations

2015/16 General

Fund

Useable Capital

Receipts Reserve

Earmarked Reserves

Total Useable

Reserves

Total Unusable Reserves

£’000’s £’000’s £’000’s £’000’s £’000’s

Included in the Comprehensive Income & Expenditure Account

Pensions Reverse

Reversal of pension charges made during the year

(85,169) 0 0 (85,169) 85,169

Pension payments appropriated to the pension reserve

189,750 0 0 189,750 (189,750)

Accumulated Compensated Absences Account 0 0 0 0 0

Reversal of leave accrual (61) 0 0 (61) 61

Total 104,520 0 0 104,520 (104,520)

2014/15 General

Fund

Useable Capital

Receipts Reserve

Earmarked Reserves

Total Useable

Reserves


£’000’s £’000’s £’000’s £’000’s £’000’s


Pensions Reverse

Reversal of pension charges made during the year

(72,550) (72,550) 72,550

Pension payments appropriated to the pension reserve

203,585 203,585 (203,585)

Accumulated Compensated Absences Account 0 0

Reversal of leave accrual (216) (216) 216

Total 130,819 0 0 130,819 (130,819)

Note 16 – Short-term Accumulated Absences Account

The Accumulated Absences Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year, e.g. annual leave entitlement and time off in lieu of payment carried forward at 31 March. Statutory arrangements require that the impact on the General Fund Balance is neutralised by transfers to or from the Account.

47

Short-term Accumulated Absences Account 2014/15 2015/16

£’000’s £’000’s

At 1 st April (2,799) (2,583)

Unused amounts reversed in year 2,799 2,583

Additional liability calculated in year (2,583) (2,520)

At 31 st March (2,583) (2,520)

48

Police Officer Pension Fund Account Introduction The Police Officer Pension Fund Account was established under the Police Pension fund Regulations 2007 (SI 2007 No 1932). It is administered on behalf of the Police and Crime Commissioner by Kent County Council. The Fund receives income each year from: • Employer’s contributions from the Police and Crime Commissioner, based on a percentage of pay • Contributions from serving police officers • Other receipts Pensions to retired officers, lump sum payments and other benefits are paid from the Fund. The Account is balanced to nil at the end of the year by a contribution from or to the General Fund. The Account is not backed by any investment assets. And its outgoings are funded entirely from the receipts identified above. The Fund accounts solely for the benefits payable in the financial year, and does not account for benefits payable after the period end. The following table identifies the movements on the Police Officer Pension Fund Account for the year.

2014/15 2015/16

£’000’s £’000’s

Contributions receivable

Police and Crime Commissioner for Kent (27,215) (23,344)

Serving Police Officers (15,388) (14,947)

Capital equivalent payment for ill-health (2,637) (1,754)

Transfers In

Individual transfers in from other schemes (684) (590)

Total Receipts (45,924) (40,634)

Benefits payable

Pensions 59,634 62,406

Commutations and lump sum payments 17,808 16,549

Lump sum death benefits

Payments to and on account of leavers

Refund of contributions 0 17

Individual transfers out to other schemes 1,040 2,067 Benefits payable - backdated in respect of Milne v Gad Commutations and lump sum payments 7,326 Interest on commutations and lump sum payments 1,663

Total Payments 78,482 90,028

Sub-total for the year before transfer from Police and Crime Commissioner for Kent of amount equal to the deficit

32,558 49,393

Transfer of amount from the PCC of amount equal to the deficit - 2015/16 benefits (21.3%)

(37,128)


(3,277)

Transfer of amount from the PCC of amount equal to the deficit - Milne v Gad

(8,989)

Transfer of amount from the Police and Crime Commissioner for Kent of amount equal to the deficit

(32,558) (49,393)

Net amount payable for the year 0 0

49

The above statement does not include liabilities to pay pensions and other benefits after the Balance Sheet date. The liabilities for future retirement benefits are disclosed in Note 14 of these Accounts. The employer rate is 21.3% (with an additional 2.9% top up contribution payable by the PCC, directly to the Home Office). In May 2015, the Pensions Ombudsman (Ombudsman) published their Final Determination in the case of Milne v Government Actuaries Department (GAD). This case centred on whether GAD had a proactive responsibility to review the commutation factors used in the calculation of the lump sum payments made to pensioners when they opt to take an increased amount of their pension benefit in that form. The Ombudsman found in favour of the plaintiff, which meant that for all Police Pension Scheme 1987 cases where pension entitlements were drawn between 1 December 2001 and 1 December 2006 recalculation of lump sum payments should take place based upon revised commutation factors to be issued by GAD, including adjustment for interest. The 2015/16 financial statements include benefits payable totalling £7.326m in respect of this matter, with all of this cost fully refundable from the Home Office. Pension Fund Net Asset Statement

2014/15 2015/16

£’000’s £’000’s

Unpaid pension benefits 0 0

Amount owing from the general fund 0 0

Net Current Assets and Liabilities 0 0

50

Glossary of Accounting Terms Accruals - The concept that income and expenditure are recognised as they are earned or incurred not as money is paid or received. Actuarial gains and losses - Actuarial gains and losses arise where actual events have not coincided with the actuarial assumptions made for the last valuation (known as experience gains and losses) or the actuarial assumptions have been changed. AGS - Annual governance statement Amortisation - The gradual elimination of a liability, such as a loan, in regular payments over a specified period of time Appropriations - Transfer of monies between the revenue account and the balance sheet. Budget - A statement of the PCC’s plans in financial terms. A budget is prepared and approved by the PCC before the start of each financial year and is used to monitor actual expenditure throughout the year. Capital Charge - A charge to the revenue account to reflect the cost of using fixed assets. Capital Expenditure - As defined in the Local Government and Housing Act 1989, but broadly expenditure on the acquisition of a fixed asset or expenditure which extends the life or value of an existing fixed asset. Capital Financing Requirement - The capital financing requirement (CFR) measures the Group’s underlying need to borrow or finance by other long-term liabilities for a capital purpose. Capital Receipts - Proceeds from the sale of capital assets. They may be used to finance new capital expenditure or repay existing loan debt. Receipts available to finance capital expenditure in future years are held in the usable capital receipts reserve. CARE Scheme – Career average revalued earnings (CARE) schemes are a type of defined pension benefit scheme that are offered by employers. The benefits at retirement are based on your earnings and length of membership of the scheme. Carrying value - An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance sheet. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset. For a company, carrying value is a company's total assets minus intangible assets and liabilities such as debt. Also known as "book value". Cash equivalent - A financial deposit placed with either a bank, building society, other local Police and Crime Commissioner for Kent or the Bank of England for a term of no longer than three months. Central Ops – Stands for Central Operations, this includes: Central Investigation Command; Strategic Partnerships and Tactical Operations Command. Chief Officers – Include the Chief Officers and Directors in the senior management team. CIES - Comprehensive Income and Expenditure Statement CIPFA - Chartered Institute of Public Finance and Accountancy, the main professional body for accountants working in the public services Contingency - An event that may occur but that is not likely or intended Corporate and Democratic Core - All aspects of the PCC’s activities in the capacity of a democratic representative, including corporate, programme and service policy making and more general activities relating to governance and the representation of local interests. It also includes the costs of the infrastructure that allows services to be provided and the information that is required for public accountability. Corporate Changes – includes general charges such as pension charges, Federation costs, Insurance; banking and treasury etc.

51

Creditors - Amounts owed by the group at the Balance Sheet date for goods received or work done. Criminal justice arrangements - Includes custody and prisoner handling, criminal justice, the criminal records bureau, Central Ticket Office for fixed penalty notices and property offices. Current service (pensions) cost - An estimate of the true economic cost of employing people in a financial year, earning years of service that will eventually entitle them to the receipt of a lump sum and pension when they retire. It measures the full liability estimated to have been generated in the year and is thus unaffected by whether any fund established to meet liabilities is in surplus or deficit. Curtailment & settlements - Curtailment arises as a result of the early payment of accrued pensions on retirement on the grounds of efficiency, redundancy or where the employer has allowed employees to retire on unreduced benefits before they would otherwise have been able to do so. DCC Portfolio – DCC stands for Deputy Chief Constable. The portfolio includes the following: Corporate Services; Corporate Communications; Professional Standards and Legal Services. Dealing with the public - Includes public enquiry officers (front counters), central communications and contact management units. Debtors - Amounts due to the Group but unpaid at the Balance Sheet date. De minimus - An amount so small that it will not have a significant impact on the accounts Depreciation - A charge calculated either on a straight line or reducing balance basis, to reflect the diminishing value of an asset over its useful economic life. Direct Revenue Financing - The amount of capital expenditure to be financed by a contribution from the revenue account in a single year. Division - The Force is organised into three geographical areas, North, West and East Divisions. Expected return on assets - The expected return on assets is a measure of the return (income from dividends, interest etc, and gains on invested sums) on the investment assets held by the pension scheme for the year. It is not intended to reflect the actual realised rate by the scheme, but a longer-term measure, based on the value of assets at the start of the year (taking into account movements in assets during the year) and an expected return factor. Fair Value - Fair value is the value of an asset or liability in an arm’s length transaction between unrelated willing and knowledgeable parties. Fixed Assets - Tangible assets which yield benefits to the Group for periods of more than one year ICT - Information, Communications & Technology IFRS - International Financial Reporting Standards Impairment - This only relates to fixed assets, including cash investments. Impairment is caused either by a consumption of economic benefits or by a general fall in prices. Intangible Fixed Assets - Assets that do not have a physical substance, but provide a benefit over a period of time, e.g. computer software. Intelligence - Includes the Central intelligence unit command team and associated support overheads, intelligence gathering and analysis. Investigations - Includes the crime support command team and associated support overheads, major investigation teams, economic crime, serious & organised crime unit, public protection units, local investigations and prisoner processing.

52

Investigative Support - Includes scenes of crime officers; forensic costs paid to external providers such as Cellmark and the Forensic Science Service; fingerprint / DNA bureau, photographics and all associated local command and support costs. Joint Support Services - The Joint Support Services Department includes: HR; Learning & Development; Information Services; Procurement; Transport, Business Services and Estate Department. Leasing - A method of financing expenditure over a period of time. There are two main types of lease: a) Finance lease - where the risks of ownership are transferred to the lessee and where the assets are recorded in the

Group’s balance sheet at a current valuation. b) Operating Lease - where the risks of ownership stay with the leasing company and the annual rental charges are

made via the Revenue Account. LGPS - Local Government Pension Scheme Liability - An obligation that legally binds an individual or company to settle a debt Local policing - Includes Neighbourhood Policing teams, incident response and management, specialist community liaison and local command teams and local support overheads. Minimum Revenue Provision (MRP) - The minimum amount of the Group’s outstanding debt which must be repaid by the revenue account in the year MIRS - Movement in reserves statement National Policing - Including Counter Terrorism and Special Branch duties Non Distributed Costs - Past Service Pension Costs (IAS19), redundancy costs and non-service specific impairments. Net Book Value - The amount at which fixed assets are included in the balance sheet, i.e. their historical cost or current value less the cumulative amounts provided for depreciation. Outturn - The actual level of spending and income in a particular year Past service (pension) costs - These are non-periodic costs – they arise from decisions taken in the current year, but whose financial effect is derived from years of service earned in earlier years. PCC - Police and Crime Commissioner PCSO - Police Community Support Officer. PFI - Private Finance Initiative Police Grant - Police grant is allocated by the Home Office using a highly complex needs based formula. PPE - Property, Plant and Equipment Provision - An amount set aside to provide for a liability which is likely to be incurred, although the amount and date of that liability are uncertain. PSE - Police Staff Employee, an employee of Kent Police who is not a Police Officer. Police Community Support Officers (PCSOs) are PSEs. Remuneration - All amounts paid to or receivable by a person. It includes taxable expenses and the estimated money value of any other benefits received by an employee other than in cash (e.g. benefits in kind). Reserves - An amount set aside for a specific purpose and carried forward to meet expenditure in future years. General reserves represent accumulated balances which may be used to support future spending. Revenue Expenditure - Spending on day to day running expenses of the PCC and Force.

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Road Policing - Includes traffic policing, vehicle recovery and casualty reduction partnerships RPI - Retail Price Index, a measure of inflation which includes housing costs. Specific Grants - Government grants to aid certain services, usually paid at a fixed proportion of spending actually incurred. Specialist operations - Includes the command team and support overheads, air support, underwater / search / marine support units, dogs sections, public order teams, ports policing units, firearms units and civil contingencies Usable Capital Receipts - Capital receipts available to finance capital expenditure in future years.

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Group Accounts for the Police and Crime Commissioner for Kent and the Chief Constable for Kent Police Audited Statement of Accounts 2015 - 2016

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Contents

Page no. Narrative Statement

3

Statement of Responsibilities for the Statement of Accounts

6

Annual Governance Statement

7

Independent Audit Report to the Police and Crime Commissioner for Kent

12

Comprehensive Income and Expenditure Statements

16

The Balance Sheets

19

The Cash Flow Statement

21

The Movement in Reserves Statement

22

Notes to the Accounts

25

Police Pension Fund Account Glossary of Accounting Terms

95

97

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Narrative Report 2015/16

This narrative report is deemed to have the same meaning as the “narrative Statement” in the accounts and audit regulation 2015. The Police Reform and Social Responsibility Act 2011 (the Act) replaced Police Authorities with elected Police and Crime Commissioners and created two corporations sole, the Office of the Commissioner and the corporation sole in the Chief Constable. In line with the Act and the related Policing Protocol, The Police and Crime Commissioner is ultimately responsible for the combined group account; both income and expenditure. Accordingly, this Statement of Accounts records the expenditure and income of the Group for the financial year 2015/16 for the Police and Crime Commissioner for Kent and the combined accounts for the Police and Crime Commissioner for Kent and the Chief Constable for Kent and its financial position at the 31 March 2016. The accounts have been prepared in accordance with the appropriate Codes of Practice published by the Chartered Institute of Public Finance and Accountancy (CIPFA). The accounts have also been produced in accordance with International Financial Reporting Standards (IFRS) and the latest CIPFA LAAP Bulletins. All assets, liabilities, non-staff contracts, property, plant and equipment are under the ownership of the Police and Crime Commissioner for Kent (PCC for Kent). In relation to employment, from April 2014, all Police Officers and the vast majority of police staff, formerly under the direction of the Chief Constable, had their employment contracts formally transferred to the Chief Constable. Conversely pre-existing staff serving the Commissioner have been retained under the formal employ of the Commissioner. All these employment arrangements have been approved by the Home Secretary. Structure of the accounts The Accounts begin with this Narrative Report followed by a statement of the responsibilities of the PCC for Kent and her Chief Finance Officer in relation to the management and reporting arrangements for the PCC for Kent’s resources (page 6). The PCC for Kent and Chief Constable for Kent have a combined ‘Annual Governance Statement’, which broadens the coverage of the previous Statement of Internal Control to embrace all of the organisation’s key governance processes and safeguards. This is shown starting on page 7. The Auditor’s Report appears at page 12 and the Summary of Accounting Policies as note 1 on page 25. The main financial statements comprise: • 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. This distinction is very important in interpreting the overall position. Authorities raise taxation to cover expenditure classified in accordance with regulations; this will be very different to the accounting cost. • The Movement in Reserves Statement - shows the movement in the year of the different reserves held by the Police and Crime Commissioner for Kent, analysed into 'useable' (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 PCC’s services for Kent, 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 Police and Crime Commissioner for Kent. • The Balance Sheet - shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Police and Crime Commissioner for Kent. The net assets of the Police and Crime Commissioner for Kent (assets less liabilities) are matched by the reserves held by her. Reserves are reported in two categories: The first category of reserves are usable reserves, i.e. those reserves that the Police and Crime Commissioner for Kent 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 that which the Police and Crime Commissioner for Kent are not able to use to provide services. This category 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'.

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• The Cash flow Statement - shows the changes in cash and cash equivalents of the Police and Crime Commissioner for Kent during the reporting period. The statement shows how the Police and Crime Commissioner for Kent 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 operations of the Police and Crime Commissioner for Kent are funded by way of taxation and grant income or from the recipients of the services provided by the Police and Crime Commissioner for Kent. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Police and Crime Commissioner for Kent'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. borrowings) to the Police and Crime Commissioner for Kent. • The Police Officer Pension Fund Account – This statement was established under the Police Pension Fund Regulations 2007 (SI 2007 No. 1932) and is administrated on behalf of the Chief Constable by Kent County Council. The Statement identifies the benefits payable in the financial year which has been offset against the contributions taking the account balance to nil. The Fund is topped up by the Group if contributions are insufficient to meet the cost of pension payments. The statement also includes the benefits payable and contributions in respect of the Milne v Gad case.

In addition to these primary statements there are a number of notes which help explain the figures, including a set of accounting policies showing the approach the Police and Crime Commissioner for Kent has taken in compiling the accounts. Other than the new ‘Narrative Statement’, there have been no significant changes in accounting policy or disclosure requirement. General Context and Medium Term Challenge In the Spending Review on the 25 November 2015 the Chancellor announced that the total budget for policing would be protected in real terms and that local force budgets would be protected in cash terms. Both assertions require each Police and Crime Commissioner (PCC) to set the maximum precept increase allowed in each of the next four years. On the 17 December, the Policing Minister announced the general grant allocation for each force area for 2016/17. In 2016/17, no PCC will face a cash reduction in “direct resource funding” assuming precept income is increased to the maximum available. For policing, direct resource funding is deemed by Government to be the sum of formula funding plus legacy council tax grants plus precept. The actual cash cut to formula grant funding for 2016/17 was 0.6% for all PCCs. The PCC for Kent introduced a precept increase to £5 for Band D properties. Despite the precept increase, the combination of grant reductions and spending pressures means a savings gap in 2016/17 of £8.7m but with a delivery plan identified and implemented by the Chief Constable by the beginning of the year. The Home Office has yet to issue specific local allocations for future years. For the purpose of current planning, it is assumed Kent loses an additional £1m in grant each year from 2017/18 onwards. In addition, it is assumed the cost of the new “Apprenticeship Levy” will be £1.3m for Kent Police. If these grants (and special levy) assumptions are combined with a roll forward of normal wage and price assumptions and an assumption of 2% precept increases from 2017/18 onwards, the savings gap over the 4 years to 2019/20 is £30m. However further top slicing of grant and/or increased cost pressures would add to the £30m gap. For that reason a 10% contingency has been added, in the latter two years, to make a total savings challenge of £33m over the four years to 2019/20. Furthermore, this gap does not take into account the possible impact of the Formula Review. Clearly, the position locally is crucially dependent on the public sector spend and deficit targets and there must be a risk that economic conditions could put pressure on the current CSR settlement through to 2020. The national funding challenge and uncertainty applies to all Forces. Building on the effective and timely response to previous CSR challenges leaves Kent Police well placed to deliver the future savings requirement but this will be on top of approximately £62m of savings delivered since 2011. Inevitably, such continuing savings as a result will impact on service delivery but the Chief Constable is committed to minimising the front line impact of future savings requirements as far as possible. Ensuring visible, local and cost effective policing remains at the core of how Kent Police will respond to the further challenges arising from future further savings requirements. The response will involve more continuing investment innovation and demand management, alongside efficiency, to identify options to deliver necessary savings in a way that both minimises front line policing impacts as far as possible but ensures that any such impacts are implemented last in any savings package and only after the level and timing of key funding changes have been confirmed.

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Performance and value for Money As dealt with below the underspend against the original budget for the year is £5.5m. More broadly, Kent Police are subject to a formal inspection regime undertaken by Her Majesty’s Inspector of Constabulary (HMIC). This regime is a vital part of the assurance that the PCC seeks in holding the force to account for VFM. As well as specific national studies, the HMIC regime covers an annual assessment of three main themes for each Force (referred to as the PEEL inspection) as follows: efficiency, effectiveness and legitimacy of the force. The efficiency element includes an assessment of the financial sustainability of the Force over the short and medium term. The review in 2015, Kent Police were graded as ‘good’, good’ and ‘outstanding’ respectively. Kent was the only force in the country to secure ‘outstanding’ for legitimacy and within the efficiency element secured an ‘outstanding’ grade for financial management and sustainability. In addition, the HMIC also publish key VFM statistics for all police forces annually. This is another key source of assurance. Kent is shown to be relatively very efficient compared to other Forces on most measures, especially as regards net cost per head and policing precept per average property. As referred to earlier, the Force have shown a consistent pattern of sensible forward planning and disciplined accelerated delivery of savings requirements but within a framework of clear service vision and use of technology and innovation to minimise front line impact. The Comprehensive Income and Expenditure Statement International Financial Reporting Standards require that the total future liabilities for the cost of pension payments to past and present employees are fully reflected in the Balance Sheet, and that their change during the year is reflected in the Comprehensive Income and Expenditure Statement. Excluding notional costs shown in the accounts to comply with international accounting standards, primarily for pensions and depreciation, the Kent Police revenue budget for 2015/16 as calculated to reflect the impact on the local council tax payer shows an underspend of £5.5m. This underspend will be mainly utilised to augment capacity for future capital and investment reserves. On a fully IFRS compliant basis, the CIES show the net cost of services at £300m, some £67m less than the previous year. However the two primary reasons for this are, first, impairments totalling £55m were charged in 2014/15 reflecting changes in valuation approach. Second, the net IAS19 adjustment in 2015/16 is some £18m less than the equivalent adjustment in 2014/15 due to a reduction in the externally assessed long term liability compared to the previous year. The overall operating deficit for the year is £97.8m compared to £176.6m in the previous year, explained mainly by the two key variations already mentioned. The total CIES is a surplus of £467.7m due to £1,031.8m change in the re-measurement of the net defined benefit liability as per the independent actuarial assessment. The Balance Sheet . Total long term assets as at 31st March 2016 stand at £207.4m, an increase of £19.5m on the previous year. The bulk of this is explained by revaluation increases on those properties valued at depreciated replacement cost which have increased by an average of 9% in the year, as assessed by the external valuation. Net current assets (i.e. net of current liabilities) stand at £64.3million, compared to £63.1million the previous year. However, net worth / assets stands at a deficit of £2.8 billion primarily because of the actuarial assessment of long term pension liabilities as at 31st March 2016 of £3 billion. This is some £0.5 billion more than the previous years and means that net assets overall are some £0.5 billion less than the previous year. Usable reserves stand at £62.5m, an increase of £2.4m on the previous year. A number of variations explain this but the most significant is the underlying under-spend on normal operations of £5.5m for the year. The Future The new Police and Crime Commissioner for Kent officially took up office on 11th May. Alongside coping with the medium term financial challenge, he will be developing his interim Police and Crime Plan for the remainder of 2016/17 and for the medium term. His manifesto details the following six key plan priorities: • Cutting crime and reducing re-offending • Delivering Value For Money • Visible, effective and dedicated policing • Putting the victim at the heart of the justice system • Tackling the misery cause by abuse, substance misuse and antisocial behaviour • Revolutionising how people with mental illness interact with the Police in Kent

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Statement of Responsibilities for the Statement of Accounts The Police and Crime Commissioner for Kent and the Chief Constable are required to: • Make arrangements for the proper administration of its financial affairs and to ensure that one of its officers has the responsibility for the administration of those affairs. That officer is the Chief Finance Officer for the Police and Crime Commissioner for Kent and the Chief Finance Officer of the Chief Constable for Kent; • Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets; • Ensure that the statement of accounts is prepared in accordance with the Accounts and Audit Regulations 2011 and to approve the accounts within three months of the end of the period to which they relate. Police and Crime Commissioner for Kent 12th August 2016 The Chief Finance Officer’s Responsibilities: The Chief Finance Officer is responsible for the preparation of the Kent Police Group statement of accounts which, in terms of the CIPFA Code of Practice on Local Authority Accounting in Great Britain (‘the Code’), is required to present a true and fair view of the financial position of the Kent Police Group at the accounting date and its income and expenditure for the year ended 31 March 2016. The Chief Finance Officer is also responsible for certifying the accounts as correct with the Chief Finance Officer for the Chief Constable before their being presented for approval by the Police and Crime Commissioner for Kent. In preparing this statement of accounts, I have: • Selected suitable accounting policies and then applied them consistently; • Made judgements and estimates that were reasonable and prudent; • Complied with the Code; • Kept proper accounting records 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 presents a true and fair view of the financial position of the Kent Police Group at 31st March 2016 and its income and expenditure for that period then ended. Chief Finance Officer for the Police and Crime Commissioner of Kent 12th August 2016

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Annual Governance Statement 2015/16 Scope of responsibility 1. This statement is expressed in the name of the Police and Crime Commissioner (subsequently to be referred

to in this document as the PCC) but also covers the accounts of the Chief Constable. The PCC and the Chief Constable are responsible for ensuring that business is conducted in accordance with the law and proper standards and that public money is safeguarded and properly accounted for, and is used efficiently and effectively. More specifically, there are a number of statutory responsibilities that flow from the Police Reform and Social Responsibility Act 2011. (The PRSR Act 2011.)

2. In discharging these various responsibilities both are responsible for putting in place proper arrangements for

the governance of their affairs including the management of risk.

3. The PCC and Chief Constable endorse the code of governance consistent with the principles of the

Chartered Institute of Public Finance and Accountancy (CIPFA)/Society of Local Authority Chief Executives (SOLACE) Framework, “Delivering Good Governance in Local Government”. This statement explains how the PCC and Chief Constable comply with that Code and also meet the statutory requirement to prepare an annual governance statement. The PCC and Chief Constable endorse and comply with the CIPFA statement on the role of the Chief Finance Officer (CFO) in local government 2010 as set out in the application note, delivering good governance in local government. Both also endorse and comply with the relevant specific codes produced by both CIPFA and the Home Office arising out of, or related to the PRSR Act 2011. This includes the March 2014 CIPFA Statement on the role of the CFO and relevant parts of the Account and Audit Regulations 2015 and the Home Office Financial Management Code of Practice.

Purpose of the Governance Framework 4. The governance framework is interpreted to comprise the systems, processes, culture and values by which

the work of the PCC and their office is directed and controlled and how it accounts to, engages with, and provides leadership to the communities they serve. The framework enables the PCC to monitor the achievement of objectives including value for money. The system of internal control plays a significant part in the overall framework. It cannot eliminate all risk of failure to deliver such objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal controls is on-going and dynamic and designed to identify and prioritise key risks and to manage them as effectively as possible. The current governance framework covering the period up 31 March 2016 has been put in place since late 2012 and early 2013. This Annual Governance Statement reflects the arrangements in place for the year ending 31 March 2016 and also considers any significant changes up to the date of approval of the statement of accounts. It also covers the Chief Constable’s operations.

The Framework The principal elements of the Framework currently in place are as follows: Identifying and Communicating the Vision, Purposes and Outcomes. 5. For the year 2015/16, under the stewardship of the Commissioner in place, the key strands have been carried

forward from the 2012 election manifesto, crafted after extensive consultation with Kent’s residents at the time and subsequently reflected in the published Police and Crime Plan. As in previous years, these key strands were refreshed, following an extensive consultation with stakeholders for the 2015/16 Police and Crime Plan. It was similarly refreshed in producing the 2016/17 Police and crime Plan, published March 2016. For 2015/16, consultation and communication is conducted on a dynamic basis including , regular visits to different local areas, active Twitter and web / communication interaction, special forums and other events (e.g., regular meetings with business community leaders, Parish Councils. Feedback and queries are collated and shared with Kent Police if required. All correspondence is responded to and as far as possible key themes emerging are identified and shared with the PCC who decides if they warrant a more formal explanation from the Force or other agencies.

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6. Objectives for Partners and partnership working are primarily set out in the published Police and Crime Plan

but reflect on-going dialogue with key partners during the course of the year. There is a regular cycle of visits to local Community Safety Partnerships, and the PCC and their senior officers attend the Kent Criminal Justice Board. Office of the PCC senior staff attend the Kent County wide Community Safety Partnership and engage with other key partners such as the Health and Probation services.

7. As well as direct engagements, web, social media and correspondence accountability to stakeholders in the widest sense, the PCC produces an Annual Report on performance against the Police and Crime Plan. That was done by the previous PCC in respect of 2015/16 and endorsed by the Police and Crime Panel in April 2016. By statute the PCC appears regularly before the local Police and Crime Panel.

Measuring and Controlling Risk 8. The Force and the Commissioner have risk registers, both at a strategic and operational level. These are

reviewed and challenged by the Joint Audit Committee. The Force strategic risk register is managed by a senior member of the Chief Constable’s team and operational risks are managed at all levels throughout the organisation. The Office of The Kent Police and Crime Commissioner’s (OKPCC) risk register process is led by the PCC’s CFO and features as part of routine discussion on overall delivery in both the Commissioner’s weekly meetings with his senior team, and senior officers’ management meetings. Both registers form part of established management processes within respective operations and are reviewed periodically by Internal Audit on behalf of the Joint Audit Committee. Understandably, the Force’s risk management needs to be much more complex given the size of the organisation and the inherent risks in operational policing. The risk management process within the OPCC contains documented sources of risk assurances. A number of key force personnel have formal accreditation in the management of risk.

Fulfilling Statutory Responsibilities to ‘Hold the Force to Account’ 9. Although the Chief Constable is responsible for operational policing matters, the PCC is required to hold him

to account for the exercise of those functions and those of the persons under his direction and control. The PCC must be satisfied that the Chief Constable has appropriate mechanisms in place and that these operate in practice. Core arrangements have been put in place since November 2012 that involve senior OKPCC staff attending key Force performance meetings and carrying out further checks such as sampling complaints. In addition, a PCC Governance Board meets bi-monthly with a published agenda and papers to hold the Chief Constable and the Force to account in public for performance. There is a weekly one to one meeting between the Commissioner and the Chief Constable. All of this is complemented by regular liaison between senior OKPCC staff and senior Officers within the force including Chief Constable and Chief Officers on general matters but including finance, estates, procurement and IT matters. This includes OPCC membership e.g. IT Governance Board, Estates Strategy Board and Capital Management Board. There is also a Joint Collaboration Governance Board in place to reflect the extensive collaboration arrangements with Essex Police. The above is supported by the agreed provision of crime and other performance data on a regular basis, normally monthly, to the PCC’s office.

10. In addition, for 2015/16, the Commissioner had in place additional arrangements to augment the ‘holding the

force to account’ function. This involved People Board reviews of organisational health, looking at ethics, morale and integrity, and also equality and diversity. Representatives from across the Force, support groups and individual officers attended with a focus on a supportive approach. For 2015/16, there was an External Ethics Committee, intended to complement the Force’s Internal Ethics Committee, reviewing the topics and actions that result.

11. In addition, where a PCC judges it necessary, the PCC can commission HMIC to conduct surveys or

investigations into any aspect of Force performance that may cause concern from time to time. This has happened with regards to Kent’s crime reporting and recording practices in the past.

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Transparent Decision Making, Governance and Clarity of Roles 12. The PCC has a comprehensive framework for decision making, including specifically a scheme of consent to

operate between the PCC and the Chief Constable supported by financial regulations and standing orders for contract arrangements. It also includes key roles and responsibilities and is the essential framework for decision making. It is published on the website.

13. In conjunction with the Chief Constable, the PCC established a new independent Joint Audit Committee

which has been in operation since March 2013. The Committee provides independent assurance on the adequacy of the corporate governance and risk management arrangements in place and the associated control environment; advising according to good governance principles and proper practice. The Joint Audit Committee has five independent members and is attended by External Audit, Internal Audit and both Chief Finance Officers and Director of Support Services; it meets four times a year.

14. All key decisions made by the PCC are published monthly, as well as all other transparency requirements,

and are provided to the Police and Crime Panel for information. The normal OKPCC provides for both Monitoring Officer and Chief Financial Officer advice in all key decision making processes and external legal advisors have also been retained. All meetings of the Governance, Audit and Collaboration Board/Committees are public with agendas published in advance and minutes published after each meeting. The Chief Constable meets with Chief Officer Colleagues at least weekly to discuss strategic and operational matters. These meetings are further supported by the monthly Strategic Change Board, chaired by the Deputy Chief Constable, at which staff associations are represented and which reviews all proposals for organisational savings and growth. The only avenues to approve changes to the establishment are now through this board or the weekly Chief Officer Strategic Meeting, chaired by the Chief Constable.

The force has a well-established with a broad representation, Ethics Committee, chaired by the Head of Professional Standards, ‘Ask the Chief’ web-pages and has recently introduced a web-portal to share ideas and comments around the force’s governance, each of which actively encourages staff to raise questions around the running of the force and provide answers to them

15. The Policing Protocol defines the role of both the Commissioner and Chief Constable. At its heart is

operational independence for the Chief Constable but the setting of the strategic framework by the PCC for policy and the allocation of resources within which the Chief Constable operates and then holding the Chief Constable to account. In addition the Commissioner has broader partnership and criminal justice responsibility and powers.

16. The Commissioner has also agreed a Code of Conduct, based on the Nolan Principles, which will guide his

actions and decision making. Similarly, the Chief Constable has accepted and rolled out the Code of Ethics, based on the Nolan Principles, throughout the Force.

Effectiveness of the Governance Environment 17. The PCC and the Chief Constable have a shared responsibility to ensure an annual review of the overall

effectiveness of the governance system. The review is informed by the work of the internal auditors and key managers within the OKPCC and the Chief Constable team (with collaboration benefits from sharing the same external and internal auditors with Essex Police). It is also informed by the comments of external agencies as they apply to Governance. As a result, the following key points can be made to evidence on-going reviews of effectiveness: • All reports from the internal and external auditor were considered by the Joint Audit Committee. All

findings were accepted and new arrangements put in place to monitor implementation.

• The outcome of HMIC inspections during the year have been shared with the Commissioner and Chief Constable, and reported to the Governance Board as a matter of course.

• The Force continues its strong record of delivery of savings plans in year. Over the medium term the PCC had set the overall financial framework in consultation with the Chief Constable, and the Chief had

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developed an effective response to the CSR challenges through to 2019/20. These are considerably less than originally feared but still significant.

• HMIC inspections confirm considerable confidence in delivering savings and the processes

underpinning medium-term planning. More significantly the HMIC PEEL inspections rate the Force as the only outstanding force for the legitimacy of its operations. However, some areas of operational business were assessed as requiring improvement.

• The risk based work of internal audit during the year reveals a generally positive view of the control

environment. • The independent Joint Audit Committee in exercising the core functions of an audit committee, have

maintained a focus on testing and monitoring Force and PCC approaches to risk management. To date the Committee are very satisfied with the general management of these arrangements but recognise it is an on-going process.

• The Joint Audit Committee have undertaken an annual review of their own operations and effectiveness

in line with national audit office best practice guidelines. • On-going and dynamic reviews of crime performance data. • A new quality performance framework has been introduced by the Chief Constable throughout the

Force. It focuses on the quality of service. • Independent review of key processes occasionally commissioned by management.

Significant Governance and Control Issues Arising 18. The view of the PCC, supported by his statutory officers, and the Chief Constable supported by his Chief

Officers is that overall the effectiveness of governance, risk management and controls remain generally sound. In the 2014/15 Annual Governance Statement a number of actions were listed as required to enhance the control environment. Where appropriate these are repeated below but with the action, programme or result set out in bold:

a. Closure of account procedures While there have been considerable improvements on the previous year, not least in ensuring satisfactory closure within expected timeframes, the emergence of historic coding errors which came to light during the closing process in 2014/15, implies the process stills requires further improvement. This has continued to be a point of focus for 2015/16 and this will continue during 2016/17.

b. Impact of major ICT changes

This remains a continuing challenge in respect of major and complex system developments, and thus a continuing point of focus into next year. However, new and much more effective governance arrangements, involving the OPCC, have been put in place. More specifically, Athena remains a key issue given its complexity both in terms of service and governance. Considerable additional focus has been applied in the year but this carries forward into the next year.

c. Responding to statutory changes in function or responsibility - e.g. potential transfer of most complaints to

the PCC. The Police and Crime Bill has yet to pass into law. This risk area is therefore carried forward into 2016/17

d. Audit and succession planning for the Committee – including internal and external audit and accelerated

closure. A degree of accelerated closure has been piloted for 2015/16 closure. This has proved a relative success. This will need to be continuing areas of focus next year. The Joint Audit committee has identified a sensible working solution to succession planning. Internal Audit was successfully retendered and the current incumbent was successful. In respect of external audit, like virtually all other local public bodies, the Joint Audit Committee is advocating a sector led approach if possible to the appointment of External Auditors for 2018/19 onwards. This will be a continuing task into next year

19. The following additional actions or areas of focus relating to overall governance have been identified for

2016/17:

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a. On-going from the previous year: Closure of account procedures; Impact of all major ICT changes but particularly Athena, responding to the Police and Crime bill including in respect of Fire and Rescue services, appointment of external auditor for 2018/19, delivery of major change programmes and associated investment over the short and medium term

b. Further refinement to the pay budget setting process around vacancy rates in terms of the revenue

budget and forecasting/planning of capital expenditure c. Development of a new Police and Crime Plan, and related governance, under the newly elected

Commissioner d. Additional devolution of victim responsibilities to PCCs generally e. Responding to the consequences of the EU Referendum result

Opinion of the Internal Auditors 20. The following is the opinion of Baker Tilly:

Kent Police and Crime Commissioner In our opinion, based upon the work we have undertaken, for the 12 months ended 31 March 2016, the organisation has an adequate and effective framework for risk management, governance and internal control. However, our work has identified further enhancements to the framework of risk management, governance and internal control to ensure that it remains adequate and effective. Chief Constable for Kent In our opinion, based upon the work we have undertaken, for the 12 months ended 31 March 2016, the organisation has an adequate and effective framework for risk management, governance and internal control. However, our work has identified further enhancements to the framework of risk management, governance and internal control to ensure that it remains adequate and effective. Significant Changes in Governance after 31 March 2016.

21. The newly elected PCC, Matthew Scott, took up office on the 11 May 2016. On an interim basis, pending further reflections during coming months alongside the necessary review of governance that will be needed on the launch of the new CIPFA/SOLACE requirements for next year, the PCC is satisfied with current arrangements. Furthermore the new PCC has confirmed the key commissioning priorities and allocations set out in his predecessor’s Police and Crime Plan. The new Commissioner will be producing his new interim Police and Crime Plan for the remainder of 2016/17 based on his manifesto promises and intends to publish his medium term commissioning priorities in autumn 2016.

Police and Crime Commissioner for Kent Chief Constable for Kent

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INDEPENDENT AUDITOR’S REPORT TO THE POLICE AND CRIM E COMMISSIONER FOR KENT Opinion on the Police and Crime Commissioner for Ke nt financial statements We have audited the financial statements of the Police and Crime Commissioner for Kent for the year ended 31 March 2016 under the Local Audit and Accountability Act 2014. The financial statements comprise the: • Police and Crime Commissioner for Kent and Group Comprehensive Income and Expenditure Statement; • Police and Crime Commissioner for Kent and Group Balance Sheet; • Police and Crime Commissioner for Kent and Group Cash Flow Statement; • Police and Crime Commissioner for Kent and Group Movement in Reserves Statement; • Police and Crime Commissioner for Kent Pension Fund Account Statements; and • related notes 1 to 41. The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16. This report is made solely to the Police and Crime Commissioner for Kent in accordance with Part 5 of the Local Audit and Accountability Act 2014 and for no other purpose, as set out in paragraph 43 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments Limited. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Police and Crime Commissioner for Kent, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of the Chief Finance Of ficer and auditor As explained more fully in the Statement of Responsibilities for the Statement Accounts set out on page 6, the Chief Finance Officer is responsible for the preparation of the Statement of Accounts, which includes the financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16, and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Police and Crime Commissioner for Kent and Group’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Chief Finance Officer; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Group Accounts for the Police and Crime Commissioner for Kent and the Chief Constable for Kent Police Audited Statement of Accounts 2015-16 to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

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Opinion on financial statements In our opinion the financial statements: • give a true and fair view of the financial position of the Police and Crime Commissioner for Kent and Group as at 31 March 2016 and of its expenditure and income for the year then ended; and • have been prepared properly in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16. Opinion on other matters In our opinion, the information given in the Group Accounts for the Police and Crime Commissioner for Kent and the Chief Constable for Kent Police Audited Statement of Accounts 2015-16 for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we report by exception We report to you if: • in our opinion the annual governance statement is misleading or inconsistent with other information forthcoming from the audit or our knowledge of the Council; • we issue a report in the public interest under section 24 of the Local Audit and Accountability Act 2014;

• we make written recommendations to the audited body under Section 24 of the Local Audit and Accountability Act 2014;

• we make an application to the court for a declaration that an item of account is contrary to law under Section 28 of the Local Audit and Accountability Act 2014;

• we issue an advisory notice under Section 29 of the Local Audit and Accountability Act 2014; or

• we make an application for judicial review under Section 31 of the Local Audit and Accountability Act 2014. We have nothing to report in these respects Conclusion on the Police and Crime Commissioner’s a rrangements for securing economy, efficiency and effectiveness in the use of resources

Police and Crime Commissioner’s responsibilities

The Police and Crime Commissioner is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements.

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We are required under Section 20(1)(c) of the Local Audit and Accountability Act 2014 to satisfy ourselves that the Police and Crime Commissioner has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. The Code of Audit Practice issued by the National Audit Office (NAO) requires us to report to you our conclusion relating to proper arrangements.

We report if significant matters have come to our attention which prevent us from concluding that the Police and Crime Commissioner has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all aspects of the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively. Scope of the review of arrangements for securing ec onomy, efficiency and effectiveness in the use of resources We have undertaken our review in accordance with the Code of Audit Practice, having regard to the guidance on the specified criterion issued by the Comptroller and Auditor General (C&AG) in November 2015, as to whether the PCC had proper arrangements to ensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people. The Comptroller and Auditor General determined this criterion as that necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether the Police and Crime Commissioner for Kent put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2016. We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment, we undertook such work as we considered necessary to form a view on whether, in all significant respects, the Police and Crime Commissioner for Kent had put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources. Conclusion On the basis of our work, having regard to the guidance issued by the C&AG in November 2015, we are satisfied that, in all significant respects, Police and Crime Commissioner for Kent put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2016.

Delay in certification of completion of the audit

We cannot formally conclude the audit and issue an audit certificate until we have completed the work necessary to issue our assurance statement in respect of the Police and Crime Commissioner’s Whole of Government Accounts consolidation pack. We are satisfied that this work does not have a material effect on the financial statements or on our value for money conclusion. Debbie Hanson, Executive Director for and on behalf of Ernst & Young LLP, Appointed Auditor Luton 12 August 2016

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Comprehensive Income and Expenditure Statements

(for the year ended 31st March 2016) 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 to the accounting cost. The taxation position is shown in the Movement in Reserves Statement.

Kent Police Group N

otes

2014/15 2015/16

Gross Expenditure Gross Income




£’000’s £’000’s £’000’s £’000’s £’000’s £’000’s

Local Policing

177,462 (6,112) 171,350 151,342 (7,423) 143,919

Dealing with the Public

33,799 (1,334) 32,465 27,283 (1,759) 25,524

Criminal Justice Arrangements

31,014 (3,447) 27,567 25,869 (3,961) 21,908

Roads Policing

15,509 (3,138) 12,371 10,776 (2,318) 8,458

Specialist Operations

21,118 (4,331) 16,787 15,727 (3,805) 11,922

Intelligence

21,120 (808) 20,312 18,290 (1,818) 16,472

Investigations

72,105 (5,086) 67,019 60,990 (5,677) 55,313

Investigative Support

11,484 (315) 11,169 10,462 (1,324) 9,138

Sub-total

383,611 (24,571) 359,041 320,739 (28,085) 292,654

National Policing 20,433 (14,428) 6,005 18,247 (13,743) 4,504

Corporate & Democratic Core 2,550 (70) 2,480 2,019 (73) 1,946

Non-Distributed Costs 5 (162) 0 (162) 892 0 892

Net Cost of Policing Services 406,432 (39,069) 367,364 341,897 (41,901) 299,996

Other Operating Expenditure

Net (Gains) / Losses on disposal of fixed assets 170 (595) Total Other Operating Expenditure

170 (595)

Financing & Investment Income & Expenditure

Interest Element of Finance Leases

104

104

Interest Payable on PFI Unitary Payments 3,944 4,161 Pensions Interest Cost 121,066 109,813 Investment Interest Income

(136) (587)

Income & expenditure in relation to investment properties & changes in their fair value

99

(688) Total Financing & Investment Income & Expenditure 125,077 112,803 Taxation & Non Specific Grant Income

Capital Grants (2,572) (2,317) Precept Income (84,323) (87,744) Non-service related Government Grants (196,534) (187,172) Home Office Pension Grant

(32,558) (37,128)

Total Taxation & Non Specific Grant Income (315,987) (314,361) Deficit for the year 176,626 97,843 (Surplus) on Revaluation of Non-Current Assets

(35,942)

(15,665)

Remeasurement of the net defined benefit liability 481,936 (549,849) Total Comprehensive Income and Expenditure 622,620 (467,671)

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Reconciliation to the budget outturn and management reports for the year 2015/16

Actual £000’s Net Cost of Services 299,996 Depreciation and AUC not adding value (6,981) Donated Assets 304 Impairments of non-current assets 2,851 Loss/gain on revaluation of non-current assets 805 Interest of finance lease 104 Interest payable on PFIs 4,161 Short term compensated absences 64 Transfers to / from reserves 76 Pensions adjustment – IAS 19 (79,938) Investment income - interest (587) Police Officer Superannuation 40,882 Police Staff Superannuation 7,159 Total for the year 2015/16 268,896 Budget 274,364 Under Spend for 2015/16 (5,468)

The Kent Police revenue budget for the year 2015/16 provided for net expenditure of £274.4m. In the event, actual net expenditure was £268.9m, representing an underspend of £5.5m. Much of this is attributable to pro-active cost reduction initiatives across the Force. The level of underspend is slightly higher than anticipated at the time of setting the Revenue Budget for 2015/16, and will be utilised on a planned basis to maintain the redundancy, relocation and regulation A20 reserve, to fund future change programmes and capital expenditure to improve efficiency and effectiveness over the medium term. Note 24 to these accounts provide information in a similar format to that received regularly by the Chief Officer team and used to make resourcing decisions. This provides meaningful information to readers of the accounts on where expenditure is incurred and on what. The final position on Revenue Spending against Budget for the year was, therefore, a satisfactory and favourable one. It has permitted the General Fund Reserve for the time being to remain just under £6m. This is over 2% of net revenue expenditure, which is in line with previous policies. Identified future liabilities (except pensions) are fully covered by separate earmarked Reserves.

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Police and Crime Commissioner for Kent N

otes

2014/15 A

2015/16





£’000’s £’000’s £’000’s £’000’s £’000’s £’000’s

Local Policing

44,321 (6,112) 38,209 21,248 (7,423) 13,825

Dealing with the Public

10,400 (1,334) 9,066 4,865 (1,759) 3,106

Criminal Justice Arrangements

9,976 (3,447) 6,529 5,470 (3,961) 1,509

Roads Policing

4,928 (3,138) 1,790 2,093 (2,318) (225)

Specialist Operations

5,584 (4,331) 1,253 3,143 (3,805) (662)

Intelligence

5,847 (808) 5,039 3,495 (1,818) 1,677

Investigations

21,072 (5,086) 15,986 11,967 (5,677) 6,290

Investigative Support

4,689 (315) 4,374 3,154 (1,324) 1,830

Sub-total

106,817 (24,571) 82,246 55,435 (28,085) 27,350

National Policing

4,732 (14,428) (9,696) 2,517 (13,743) (11,226)

Corporate & Democratic Core

2,086 (70) 2,016 1,661 (73) 1,588

Non-Distributed Costs 5 (462) 0 (462) (127) 0 (127)

Net Cost of Policing Services

113,173 (39,069) 74,107 59,486 (41,901) 17,585

Impairment

Intra Group Funding For Chief Constable's Net Service Cost

283,504 287,704

Net Cost of Services

357,611 305,289

Other Operating Expenditure Net (Gains) / Losses on disposal of fixed assets 170 (595) Total Other Operating Expenditure 170 (595) Financing & Investment Income & Expenditure

Interest Element of Finance Leases 104 104 Interest Payable on PFI Unitary Payments 3,944 4,161 Pensions Interest Cost

0 0

Investment Interest Income (136) (587) Income & expenditure in relation to investment properties & changes in their fair value 99 (688) Total Financing & Investment Income & Expenditure 4,011 2,990 Taxation & Non Specific Grant Income Capital Grants (2,572) (2,317) Precept Income (84,323) (87,744) Non-service related Government Grants (196,534) (187,172) Home Office Pension Grant (32,558) (37,128) Total Taxation & Non Specific Grant Income

(315,987) (314,361)

Deficit / (Surplus) for the year 45,807 (6,677) (Surplus) on Revaluation of Non-Current Assets (35,942) (15,665) Remeasurement of the net defined benefit liability

0

0

Total Comprehensive Income and Expenditure 9,865 (22,342)

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The Balance Sheet The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Kent Police Group. The net assets of Kent Police (assets less liabilities) are matched by the reserves held by the Kent Police. Reserves are reported in two categories: The first category of reserves are usable reserves, i.e. those reserves that the Police and Crime Commissioner for Kent 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 Police and Crime Commissioner for Kent is not able to use to provide services. This category 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.

Group PCC

Notes

Group PCC

31 March 2015 31 March 2015 31 March 2016 31 March 2016

£000 £000 £000 £000

Property, Plant & Equipment 156,423 156,423 9 Land and Buildings 171,090 171,090 15,712 15,712 9 Vehicles, Plant & Equipment 15,952 15,952 2,773 2,773 9 Assets under Construction 445 445 3,449 3,449 9 Surplus Assets 3,315 3,315

43 43 Heritage Assets 37 37

6,720 6,720 10 Investment Properties 6,823 6,823 Intangible Assets

1,871 1,871 11 Software 3,123 3,123 0 0 11 Assets under Development 5,746 5,746

186,991 186,991 206,531 206,531

Long Term Investments 425 425 Non Property Investments 425 425

505 505 Long Term Debtors 438 438

187,921 187,921 Total Long Term Assets 207,394 207,394

46,290 46,290 Short Term Investments 63,988 63,988

335 335 Inventories 317 317 24,018 24,018 13 Short Term Debtors 31,289 31,289 23,218 23,218 14 Cash & Cash Equivalents 6,848 6,848 2,081 2,081 15 Assets Held for Sale 833 833

95,942 95,942 Total Current Assets 103,275 103,275

(21,728) (19,145) 16 Short Term Creditors (37,315) (34,795) (11,088) (11,088) 18 Provisions falling due within one year (1,665) (1,665)

(32,816) (30,233) Total Current Liabilities (38,980) (36,460)

(45,507) (45,507) 17 Long Term Creditors (44,140) (44,140) (1,805) (1,805) 18 Provisions falling due after one year (1,407) (1,407)

Other Long Term Liabilities (3,424,802) 0 35 Police Officer & Police Staff Pension Liability (2,979,534) 0

(3,472,114) (47,312) Total Long term Liabilities (3,025,081) (45,547)

(3,221,067) 206,318 Net Assets (2,753,392) 228,662

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Balance Sheet continued.

31 March 2015 31 March 2015

31 March 2016 31 March 2016

£000 £000 £000 £000

Restated Restated

19 Usable Reserves

5,640 5,640 General Fund 5,640 5,640 25,623 25,623 Earmarked Revenue Reserves 22,187 22,187 25,649 25,649 Capital Reserve 31,347 31,347

119 119 Capital Contributions Unapplied Reserve 247 247 3,098 3,098 Insurance Fund 3,098 3,098

60,129 60,129 Total Usable Reserves 62,519 62,519

20 Unusable Reserves

35,495 35,495 Revaluation Reserve 49,956 49,956 (3,424,802) 0 Pensions Reserve (2,979,534) 0

108,634 108,634 Capital Adjustment Account 113,573 113,573 (12) (12) Financial Instruments Adjustment Account (12) (12)

2,073 2,073 Collection Fund Adjustment Account 2,626 2,626 (2,583) 0 Short Term Accumulated Compensated Absences Account (2,520) 0

(3,281,196) 146,189 Total Unusable Reserves (2,815,911) 166,143

(3,221,067) 206,318 Total Reserves (2,753,392) 228,662

These financial statements replace the unaudited financial statements certified by Sean Nolan, Chief Finance Officer for the Police and Crime Commissioner for Kent on 10th June 2016.

Balance Sheet for the Police and Crime Commissioner for Kent The Police and Crime Commissioner for Kent owns all of the assets and bank accounts of the Group and therefore the Group Balance sheet is in many respects identical to that of the PCC. The only differences are that the Group Balance sheet includes the net pension liability and the provision for compensated absences, both of which sit with the accounts of the Chief Constable of Kent Police. I confirm that the Police and Crime Commissioner for Kent approved these accounts. . Sean Nolan, Chief Finance Officer for the Police And Crime Commissioner for Kent

12th August 2016

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The Cash Flow Statement The Cash flow Statement shows the changes in cash and cash equivalents of the Kent Police Group during the reporting period. The statement shows how Kent Police 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 operations of Kent Police are funded by way of taxation and grant income or from the recipients of the services provided by Kent Police. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to Kent Police’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. borrowings) to Kent Police.

Cash Flow Statement for Kent Police Group

2014/15 2015/16

£’000’s £’000’s

Net (surplus) or deficit on the provision of services 176,626 97,843

Adjustments to net surplus or deficit on the provision of services for non-cash movements (Note 21)

(186,075) (110,123)

Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities (Note 21)

4,787 7,322

Net Cash flows from Operating Activities (4,662) (4,958)

Investing Activities (Note 22) 11,591 20,519

Financing Activities (Note 23) 1,892 809

Net increase or decrease in cash and cash equivalen ts 8,821 16,370

Cash and cash equivalents at the beginning of the reporting period 32,039 23,218

Cash and cash equivalents at the end of the reporti ng period (Note 14) 23,218 6,848

All bank accounts are held in the name of the Police and Crime Commissioner for Kent and all cash flows are therefore attributable to the Office of the PCC.

Cash Flow Statement for Kent Police & Crime Commiss ioner for Kent

2014/15 2015/16

£’000’s £’000’s

Net (surplus) or deficit on the provision of services 45,807 (6,677)

Adjustments to net surplus or deficit on the provision of services for non-cash movements (Note 21) (55,256) (5,603)

Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities (Note 21)

4,787 7,322

Net Cash flows from Operating Activities (4,662) (4,958)

Investing Activities (Note 22) 11,591 20,519

Financing Activities (Note 23) 1,892 809

Net increase or decrease in cash and cash equivalen ts 8,821 16,370

Cash and cash equivalents at the beginning of the reporting period 32,039 23,218

Cash and cash equivalents at the end of the reporti ng period (Note 14) 23,218 6,848

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The Movement in Reserves Statement This statement shows the movement in year on the different reserves held by Kent Police, analysed into 'useable' (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 policing 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 Police and Crime Commissioner for Kent.

Group Statement 2015/16 General

Fund

Capital Receipts &


Earmarked Reserves

TOTAL USEABLE

RESERVES


TOTAL RESERVES

£'000's £'000's £'000's £'000's £'000's £'000's BALANCE AS AT 1st APRIL 2015 5,640 25,768 28,721 60,129 (3,281,195) (3,221,066) Surplus / (Deficit) on the Provision of Services on an accounting basis (97,843) 0 0 (97,843) 0 (97,843) Other Comprehensive Income & Expenditure 0 0 0 0 565,514 565,514

TOTAL COMPREHENSIVE INCOME & EXPENDITURE (97,843) 0 0 (97,843) 565,514 467,671 Adjustments between accounting basis and funding basis under regulations (Note 7) 103,582 (3,348) 0 100,234 (100,234) 0 Net increase / decrease before transfers to Earmarked Reserves 5,739 (3,348) 0 2,391 465,284 467,675 Transfer to / from Earmarked Reserves (5,739) 9,174 (3,435) 0 0 0 Increase / (Decrease) in the year (0) 5,826 (3,435) 2,391 465,284 467,675

BALANCE AS AT 31ST MARCH 2016 5,640 31,594 25,285 62,519 (2,815,911) (2,753,392)

* The Capital Receipts reserve in the table above incorporates the Capital Contributions Unapplied Reserve for clarity. Note 19 includes additional information on the Capital Contributions Unapplied Reserve.

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PCC Statement 2015/16 General

Fund

Capital Receipts &


Earmarked Reserves

TOTAL USEABLE

RESERVES


TOTAL RESERVES

£'000's £'000's £'000's £'000's £'000's £'000's BALANCE AS AT 1st APRIL 2015 5,640 25,768 28,721 60,129 146,190 206,319

Surplus / (Deficit) on the Provision of Services on an accounting basis 6,677 0 0 6,677 0 6,677 Other Comprehensive Income & Expenditure 0 0 0 0 15,665 15,665 TOTAL COMPREHENSIVE INCOME & EXPENDITURE 6,677 0 0 6,677 15,665 22,342

Adjustments between accounting basis and funding basis under regulations (Note 7) (938) (3,348) 0 (4,286) 4,286 0

Net increase / decrease before transfers to Earmarked Reserves 5,739 (3,348) 0 2,391 19,952 22,343

Transfer to / from Earmarked Reserves (5,739) 9,174 (3,435) 0 0 0 Increase / (Decrease) in the year (0) 5,826 (3,435) 2,390 19,952 22,342

BALANCE AS AT 31ST MARCH 2016 5,640 31,594 25,285 62,519 166,143 228,662

Group Statement 2014/15 General

Fund

Capital Receipts &


Earmarked Reserves

TOTAL USEABLE

RESERVES


TOTAL RESERVES

£'000's £'000's £'000's £'000's £'000's £'000's BALANCE AS AT 1st APRIL 2014 5,640 20,475 25,524 51,639 (2,650,085) (2,598,446) Surplus / (Deficit) on the Provision of Services on an accounting basis (176,626) 0 0 (176,626) 0 (176,626) Other Comprehensive Income & Expenditure 0 0 0 0 (445,994) (445,994)

TOTAL COMPREHENSIVE INCOME & EXPENDITURE (176,626) 0 0 (176,626) (445,994) (622,620) Adjustments between accounting basis and funding basis under regulations (Note 7) 179,823 5,293 0 185,116 (185,116) 0 Net increase / decrease before transfers to Earmarked Reserves 3,197 5,293 0 8,490 (631,110) (622,620) Transfer to / from Earmarked Reserves (3,196) 0 3,196 0 0 0 Increase / (Decrease) in the year 0 5,293 3,196 8,490 (631,110) (622,620)

BALANCE AS AT 31ST MARCH 2015 5,640 25,768 28,721 60,129 (3,281,196) (3,221,067)

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PCC Statement 2014/15 General

Fund

Capital Receipts &


Earmarked Reserves

TOTAL USEABLE

RESERVES


TOTAL RESERVES

£'000's £'000's £'000's £'000's £'000's £'000's BALANCE AS AT 1st APRIL 2014 5,640 20,475 25,524 51,639 164,545 216,184 Surplus / (Deficit) on the Provision of Services on an accounting basis (45,807) 0 0 (45,807) 0 (45,807) Other Comprehensive Income & Expenditure 0 0 0 0 35,942 35,942 TOTAL COMPREHENSIVE INCOME & EXPENDITURE (45,807) 0 0 (45,807) 35,942 (9,865) Adjustments between accounting basis and funding basis under regulations (Note 7) 49,003 5,293 0 54,297 (54,297) 0

Net increase / decrease before transfers to Earmarked Reserves 3,197 5,293 0 8,490 (18,355) (9,865) Transfer to / from Earmarked Reserves (3,196) 0 3,196 0 0 0 Increase / (Decrease) in the year 0 5,293 3,196 8,490 (18,355) (9,865)

BALANCE AS AT 31ST MARCH 2015 5,640 25,768 28,721 60,129 146,189 206,319

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Notes to the Accounts The following policies apply to the Kent Police Group Accounts and also apply to the Single Entity of the Police and Crime Commissioner for Kent unless otherwise stated. Note 1 – Accounting Policies i. General Principles The Statement of Accounts summarises the Police and Crime Commissioner for Kent’s (PCC for Kent) transactions for the 2015/16 financial year and its position at the year-end of 31 March 2016 and also those of the Kent Police Group. The Accounts and Audit Regulations 2011 require the Police and Crime Commissioner for Kent to prepare an annual Statement of Accounts in accordance with proper accounting practices. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2015/16 and the Service Reporting Code of Practice (SERCOP) 2015/16, supported by International Financial Reporting Standards (IFRS). The accounting convention adopted in the Statement of Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments. The Going Concern basis is also assumed. Any reference to the Police and Crime Commissioner for Kent hereafter in the Accounting Policies also includes the Kent Police Group unless expressly stated otherwise. At midnight on the 21st November 2012 all property, rights, assets and liabilities which previously belonged to the Kent Police Authority were transferred to the Police and Crime Commissioner for Kent (PCC). This includes all property, plant and equipment and income. The Chief Constable’s Accounts show all expenditure related to the delivery of policing services for the year including staff costs, pension costs and the provision for short term compensated absences whilst the PCC’s Single Entity Accounts only show those costs directly related to the Office of the Police and Crime Commissioner. ii. Accruals of Income and Expenditure Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular: • Revenue from the sale of goods is recognised when the Police and Crime Commissioner for Kent transfers the significant risks and rewards of ownership to the purchaser and it is probable that economic benefits or service potential associated with the transaction will flow to the organisation. • Revenue from the provision of services is recognised when the organisation can measure reliably the percentage of completion of the transaction and it is probable that economic benefits or service potential associated with the transaction will flow to the organisation. • Supplies are recorded as expenditure when they are consumed – where there is a gap between the date supplies are received and their consumption, they are carried as inventories on the Balance Sheet. • Expenses in relation to services received (including services provided by employees) are recorded as expenditure when the services are received rather than when payments are made. • Interest receivable on investments and interest payable on borrowings is accounted for respectively as income and expenditure on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract. Where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet. Where debts may not be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected. iii. Acquisitions and Discontinued Operations The Police and Crime Commissioner for Kent did not acquire or discontinue any operations in the year 2015/16.

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iv. 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 within three months, ninety days, from the date of acquisition and 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 Police and Crime Commissioner for Kent’s cash management. v. 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 Police and Crime Commissioner for Kent’s financial performance.

vi. 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 the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the Police and Crime Commissioner for Kent’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. vii. Charges to Revenue for Non-Current Assets Services, support services and trading accounts are debited with the following amounts to record the cost of holding non-current 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 written off; • amortisation of intangible fixed assets attributable to the service. The Police and Crime Commissioner for Kent is not required to raise council tax to fund depreciation, revaluation and impairment losses or amortisations. Depreciation, revaluation and impairment losses and amortisations are therefore replaced by the contribution in the General Fund Balance by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two. viii. Employee Benefits Benefits Payable During Employment The majority of staff costs are accounted for within the Chief Constable’s Statement of Accounts as it is he who has direction and control over them. The Police and Crime Commissioner for Kent’s Accounts only reflect those staff directly employed in the Office of the Police and Crime Commissioner for Kent. All staff costs are shown in the Kent Police Group statements. 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 (e.g. cars) for current employees and are recognised as an expense for services in the year in which employees render service to the Police and Crime Commissioner for Kent or Kent Police Group. 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 made at the wage and salary rates applicable in the following accounting year, being the period in which the employee takes the benefit.

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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. Short-term compensated absences are those periods in which an employee does not provide services to the employer but continues to be paid. Compensated absences may be accumulating or non-accumulating. Accumulating absences are those that are carried forward and can be used in future periods if the current entitlement is not used in full. For Kent Police this includes annual leave, flexi-leave and time off in lieu. Accumulating absences may be vesting or non-vesting. Where vesting, employees who leave are entitled to a cash payment in respect of any unused entitlement; where non-vesting, benefits lapse if an employee leaves before the vesting date. For Kent Police vesting accumulated short term compensated absences are annual leave and time off in lieu only. Flexi-time is non-vesting. Short term accumulating compensated absences shall be: • Recognised when employees render services that increases their entitlement to future compensated absences. • Measured as the additional amount that Kent Police expects to pay as a result of unused entitlement that has accumulated at the Balance Sheet date including associated employer’s national insurance contributions. Termination Benefits Termination benefits are amounts payable as a result of a decision by the Police and Crime Commissioner for Kent or the Chief Constable for Kent to terminate an employee’s contract before the normal retirement date or an officer’s decision to accept voluntary redundancy and are charged on an accruals basis to overheads in the Comprehensive Income and Expenditure Statement. Termination benefits are recorded in the accounts when Kent Police have confirmed and communicated their decision to the termination of the employment of an individual or group of individuals or making an offer to encourage voluntary redundancy. Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund balance to be charged with the amount payable by Kent Police 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 Kent Police participates in three different types of pension schemes for police officers and a single scheme for police staff. Post employee benefits are associated with the Kent Police Group and Chief Constable’s Accounts, they do not materially affect the accounts of the Single Entity for the Police and Crime Commissioner for Kent. • The Police Pension Scheme (PPS), governed by the Police Pensions Regulations 1987 (as amended). • The New Police Pension Scheme (NPPS), regulated under the Police Pension Regulations 2006. • The 2015 Scheme, regulated under the Police Pension Regulations 2015 • The Local Government Pensions Scheme, administered by Kent County Council. As a results of changes in requirements under International Accounting Standard 19 (IAS19) the net pensions liability is analysed into several components: • Service cost – comprising: o current service cost being the increase in liabilities as a result of years of service earned this year – allocated in the Comprehensive Income and Expenditure Statement to the services for which the employees worked; o past service cost – the increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years – debited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part of Non Distributed Costs; o gains or losses on settlements and curtailments – the result of actions to relieve Kent Police of liabilities or events that reduce the expected future service or accrual of benefits of employees – debited or credited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part of Non Distributed Costs;

• Interest cost – the expected increase in the present value of liabilities during the year as they move one year

closer to being paid – debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement;

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• Re-measurement of the net defined benefit liability – comprising: o expected return on assets – the annual investment return on the fund assets attributable to Kent Police, based on an average of the expected long-term return – credited to the Pension Reserve; o actuarial gains and losses arising on changes in demographic assumptions– changes in the net pensions liability that arise because experience has not reflected the demographic assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions – debited to the Pensions Reserve; o actuarial gains and losses arising on changes in financial assumptions– changes in the net pensions liability that arise because experience has not reflected the financial assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions – debited to the Pensions Reserve;

• contributions paid to the pension fund – cash paid as employer’s contributions to the pension fund in settlement of liabilities; not accounted for as an expense. In relation to retirement benefits, statutory provisions require the General Fund balance to be charged with the amount payable by Kent Police to the pension fund or directly to 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 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.

Police Pension Schemes All police schemes are contributory occupational pension schemes with officers making varying levels of contributions dependent on their salary level. Contributions to both the old and new police pension schemes have three tiers as follows:

Salary Level

1987 Scheme 2006 Scheme CARE 2015 Scheme (wef 1st April 2015)


2015/2016 (2014/2015)

% Contribution Rate

2015/2016 (2014/2015)

% Contribution Rate

£0 to £27,000 pa 14.25% (14.25%) 11.00% (11.00%) 12.44% (n/a)

£27,000 to £59,999 pa 14.25% (14.25%) 12.05% (12.05%) 13.44% (n/a)

£60,000 pa or more 15.05% (15.05%) 12.75% (12.75%) 13.78% (n/a)

The Police Pension Account was set up on 1st April 2006 to administer all police pension schemes. The police pension schemes are defined benefit schemes (without managed pension assets). The employer’s contribution for each serving officer is common to all schemes at 21.3% of pensionable pay. This is set nationally and is subject to a three yearly review. Accrued net pension liabilities have been assessed on an actuarial basis in accordance with IAS 19. The net liability and a pensions reserve incorporating all pension schemes have been recognised in the Balance Sheet, as have entries in the Comprehensive Income and Expenditure Account for movements in the asset / liability relating to the defined benefit schemes. Transfers into and out of the schemes representing joining and leaving the police are recorded on a cash basis in the Pension Account as a result of the time taken to finalise the sums involved. The liabilities of the police pension schemes attributable to Kent Police are included in the Balance Sheet on an actuarial basis using the projected unit method i.e. and assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates and projections of earnings for current employees. Liabilities as well as anticipated gains and losses are discounted to their value at current prices using a discount rate prescribed by the Funds’ Actuaries. The Local Government Pension Scheme

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The Local Government Pension Scheme is a contributory occupational pension scheme with police staff making contributions in accordance with the table below dependent on their salary level.

Salary Level LGPS

Rate up to 31st March 2016

%

Up to £13,600 pa 5.5

£13,601 to £21,200 pa 5.8

£21,201 to £34,400 pa 6.5

£34,401 to £43,500 pa 6.8

£43,501 to £60,700 pa 8.5

£60,701 to £86,000 pa 9.9

£86,001 to £101,200 pa 10.5

£101,201 to £151,800 pa 11.4

More than £151,801 pa 12.5 The Local Government Scheme is accounted for as a defined benefits scheme. The liabilities of the pension fund attributable to Kent Police are included in the Balance Sheet on an actuarial basis using the projected unit method – i.e. an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, and projections of projected earnings for current employees. Liabilities are discounted to their value at current prices. The assets of the pension fund attributable to Kent Police are included in the Balance Sheet at their fair value: • quoted securities – current bid price • unquoted securities – professional estimate • unitised securities – current bid price • property – market value. Discretionary Benefits Kent Police 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. ix. 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 reporting period – the Statement of Accounts is adjusted to reflect such events; • those that are indicative of conditions that arose after the reporting period – the Statement of Accounts is not adjusted to reflect such events, but where a category of events would have a material effect, disclosure is made in the notes of the nature of the events and their estimated financial effect. Events taking place after the date of authorisation for issue are not reflected in the Statement of Accounts. x. Financial Instruments

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Financial Liabilities Financial liabilities, which includes trade payables (creditors) are recognised on the Balance Sheet when the Police and Crime Commissioner for Kent 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. Financial Assets Financial assets are classified into two types: • loans and receivables – assets that have fixed or determinable payments but are not quoted in an active market; • available-for-sale assets – assets that have a quoted market price and/or do not have fixed or determinable payments. The Police and Crime Commissioner for Kent’s financial assets include bank deposits, trade receivables (debtors), and cash investments which are all classified as loans and receivables, also assets that have fixed or determinable payments but are not quoted in an active market. Loans and Receivables Loans and receivables are recognised on the Balance Sheet when the Police and Crime Commissioner for Kent becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value. They are subsequently measured at their amortised cost. xi. Foreign Currency Translation

Where the Police and Crime Commissioner for Kent has entered into a transaction denominated in a foreign currency, the transaction is converted into sterling at the exchange rate applicable on the date the transaction was effective. Where amounts in foreign currency are outstanding at the year-end, they are reconverted at the spot exchange rate at 31 March. Resulting gains or losses are recognised in the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement.

xii. 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 Police and Crime Commissioner for Kent when there is reasonable assurance that: • the Police and Crime Commissioner for Kent will comply with the conditions attached to the payments, and • the grants or contributions will be received. Amounts recognised as due to the Police and Crime Commissioner for Kent are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contribution has 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.

xiii. Intangible Assets

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Expenditure on non-monetary assets that do not have physical substance but are controlled by the Police and Crime Commissioner for Kent 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 Police and Crime Commissioner for Kent. Internally generated assets are capitalised where it is demonstrable that the project is technically feasible and is intended to be completed (with adequate resources being available) and the Police and Crime Commissioner for Kent will be able to generate future economic benefits or deliver service potential by being able to sell or use the asset. Expenditure is capitalised where it can be measured reliably as attributable to the asset and is restricted to that incurred during the development phase (research expenditure cannot be capitalised). Intangible assets are measured initially at cost. Amounts are only revalued where the fair value of the assets held by the Police and Crime Commissioner for Kent can be determined by reference to an active market. In practice, no intangible asset held by the Police and Crime Commissioner for Kent meets this criterion, and they are therefore carried at amortised cost. The depreciable amount of an intangible asset is amortised over its useful life to the relevant service line(s) 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 General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and for any sale proceeds, the Capital Receipts Reserve. xiv. Interests in Companies and Other Entities The Police and Crime Commissioner for Kent has a contractual relationship with Kent County Council for some services including Treasury Management and Pensions administration. Collaborative work is on-going with Essex Police aimed at increasing service provision and quality whilst reducing costs wherever possible. Examples of this include a joint Serious Crime Directorate as well as a number of support services functions. These are accounted for under IFRS 10, Consolidated Financial Statements; IFRS 11, Joint Arrangements & IFRS 12, Disclosure of Interests in Other Entities rules. The Police and Crime Commissioner for Kent does not however, have any interests in companies or other entities that have the nature of subsidiaries, associates or joint ventures except for the relationship between the Police and Crime Commissioner for Kent and the Chief Constable for Kent and is therefore only required to prepare group accounts on this basis.

xv. Inventories Inventories are included in the Balance Sheet at the lower of cost and net realisable value. For Kent Police this includes specialist equipment such as speed cuffs and ASPs, as well as vehicles parts and fuel held at the Transport Services workshops. Uniform stores are contracted out to an external supplier with only sizing samples being retained centrally. xvi. Investment Property Investment properties are those that are used solely to earn rentals and/or for capital appreciation. The definition is not met if the property is used in any way to facilitate the delivery of services or production of goods or is held for sale. The Police and Crime Commissioner for Kent also have several former police houses which it rents to private individuals on short term agreements. These assets are therefore classified as investment properties. Investment properties are measured initially at cost and subsequently at fair value, based on the amount at which the asset could be exchanged between knowledgeable parties at arm’s-length. Properties are not depreciated but are revalued annually according to market conditions at the year-end. Gains and losses on revaluation are posted to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. The same treatment is applied to gains and losses on disposal. Rentals received in relation to investment properties are credited to the Financing and Investment Income line and result in a gain for the General Fund Balance. However, revaluation and disposal gains and losses are not permitted by statutory arrangements to have an impact on the General Fund Balance. The gains and losses are

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therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and for any sale proceeds, the Capital Receipts Reserve. xvii. Jointly Controlled Operations Jointly controlled operations are activities undertaken by the Police and Crime Commissioner for Kent in conjunction with other partners that involve the use of the assets and resources of the partners rather than the establishment of a separate entity. The Police and Crime Commissioner for Kent recognises on its Balance Sheet the assets that it controls and the liabilities that it incurs and debits and credits the Comprehensive Income and Expenditure Statement with the expenditure it incurs and the share of income it earns from the activity of the operation. The Police and Crime Commissioner for Kent has two such agreements: • The Joint Serious Crime Directorate; • The Joint Support Services Department which includes HR, Learning & Development, Information Services, Procurement, Transport, Business Services and Estate Department. Each of these is jointly controlled between the Police Forces of Kent and Essex. xviii. Heritage Assets Accounting for Heritage Assets is in line with FRS30 and Code of Practice section 4.10. No single item held by the Kent Police Museum is considered to be above the Police and Crime Commissioner for Kent’s de-minimis limit for capitalisation. In order to meet the requirements of the Code of Practice and FRS 30 (Heritage Assets) the estimated total value of the assets has been pooled and is shown as a single item. Individual item values have been ascertained by the museum curator and force insurance team. xix. Leases Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the property, plant or equipment from the lessor to the lessee. All other leases are classified as operating leases. Where a lease covers both land and buildings, the land and buildings elements are considered separately for classification.

The Police and Crime Commissioner for Kent as Lesse e Finance Leases Property, plant and equipment held under finance leases are recognised on the Balance Sheet at the commencement of the lease at its fair value measured at the lease’s inception (or the present value of the minimum lease payments, if lower). The asset recognised is matched by a liability for the obligation to pay the lessor. Initial direct costs of the Police and Crime Commissioner for Kent are added to the carrying amount of the asset. Premiums paid on entry into a lease are applied to writing down the lease liability. Contingent rents are charged as expenses in the periods in which they are incurred. Lease payments are apportioned between: • a charge for the acquisition of the interest in the property, plant or equipment – applied to write down the lease liability, and • a finance charge (debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement). Property, Plant and Equipment recognised under finance leases is accounted for using the policies applied generally to such assets, subject to depreciation being charged over the lease term if this is shorter than the asset’s estimated useful life (where ownership of the asset does not transfer to the Police and Crime Commissioner for Kent at the end of the lease period). The Police and Crime Commissioner for Kent is not required to raise council tax to cover depreciation or revaluation and impairment losses arising on leased assets. Instead, a prudent annual contribution is made from revenue funds towards the deemed capital investment in accordance with statutory requirements. Depreciation and revaluation and impairment losses are therefore substituted by a revenue contribution in the General Fund

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Balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two. Operating Leases Rentals paid under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of the services benefitting from use of the leased property, plant or equipment. Charges are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (e.g. there is a rent-free period at the commencement of the lease). The Police and Crime Commissioner for Kent as Lesso r Operating Leases Where the Police and Crime Commissioner for Kent grants an operating lease over a property or an item of plant or equipment, the asset is retained in the Balance Sheet. Rental income is credited to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Credits are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (e.g. there is a premium paid at the commencement of the lease). Initial direct costs incurred in negotiating and arranging the lease are added to the carrying amount of the relevant asset and charged as an expense over the lease term on the same basis as rental income. xx. Overheads and Support Services The costs of overheads and support services are charged to those that benefit from the supply or service in accordance with the costing principles of the CIPFA Service Reporting Code of Practice 2015/16 (SERCOP). The total absorption costing principle is used – the full cost of overheads and support services are shared between users in proportion to the benefits received, with the exception of: Non Distributed Costs – the cost of discretionary benefits awarded to employees retiring early and impairment losses chargeable on Assets Held for Sale. These two cost categories are defined in SERCOP and accounted for as separate headings in the Comprehensive Income and Expenditure Statement, as part of Net Expenditure on Continuing Services. xxi. Property, Plant and Equipment Assets that have physical substance and are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and that are expected to be used during more than one financial year are classified as non-current assets. Spending on these assets is capitalised if the asset will bring benefits to the Police and Crime Commissioner for Kent for more than one year and was in excess of the Police and Crime Commissioner for Kent’s agreed de-minimis level for capital expenditure of £12,000. All motorised vehicles are also classified as non-current assets regardless of their cost or value at acquisition. Recognition Expenditure on the acquisition, creation or enhancement of non-current assets 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 Police and Crime Commissioner for Kent 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 to the Comprehensive Income & Expenditure Statement 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 initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

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The Police and Crime Commissioner for Kent 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. Donated assets are measured initially at fair value. The difference between fair value and any consideration paid is credited to the Taxation and Non-Specific Grant Income line of the Comprehensive Income and Expenditure Statement, unless the donation has been made conditionally. Until conditions are satisfied, the gain is held in the Donated Assets Account. Where gains are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance to the Capital Adjustment Account in the Movement in Reserves Statement. Assets are then carried in the Balance Sheet using the following measurement bases: • assets under construction – depreciated historical cost • all other assets – fair value, determined as the amount that would be paid for the asset in its existing use (existing use value – EUV). Prior to 2015/16 –no consistent definition in IFRS In general: “the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.” IFRS 13 defines Fair value (FV) as 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. Therefore, the asset classes are measured as follows: • OP Buildings and non-specialised – Measured at Existing Use Value • Surplus Assets – Measured at Fair Value in accordance with section 2.10 (IFRS 13) • Non active market / specialised – Measured at Depreciated Replacement Cost (RICS UKGN2). For example Custody Buildings. IFRS 13 – Code impact � Operational PPE measured at service potential (current value) –no change in measurement requirements. � Surplus assets measured for their economic benefits at FV under IFRS 13 from 2015/16. � Investment properties –highest and best use. � Liabilities –best transfer price. Where there is no market-based evidence of fair value because of the specialist nature of an asset, such as a custody suite or police station with an integral custody suite, depreciated replacement cost (DRC) is used as an estimate of fair value. 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, but as a minimum every five years. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains. Exceptionally, gains might be credited to the Comprehensive Income and Expenditure Statement 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(s) 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

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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 line(s) 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 assets that are not yet available for use (ie assets under construction). Depreciation is calculated on the following bases:

• buildings – straight-line allocation over the useful life of the property as estimated by the valuer.

• vehicles, plant, furniture and equipment – straight-line allocation over the useful life of each asset, as advised by a suitably qualified officer

Where an item of Property, Plant and Equipment asset has major components whose cost is significant in relation to the total cost of the item, the components are depreciated separately. Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and the depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the Capital Adjustment Account. Disposals and Non-current Assets Held for 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. If assets no longer meet the criteria to be classified as Assets Held for Sale, they are reclassified back to non-current assets and valued at the lower of their carrying amount before they were classified as held for sale; adjusted for depreciation, amortisation or revaluations that would have been recognised had they not been classified as Held for Sale, and their recoverable amount at the date of the decision not to sell. Assets classified as held for sale on the balance sheet satisfy the following criteria laid down by the International Accounting Standards Board: • The asset must be available for immediate sale in its present condition subject to terms that are usual and customary for sales of such assets. • The sale must be highly probable, senior management must be committed to the plan to sell the asset and an active programme to locate a buyer and complete the plan must have been initiated. • The asset must be actively marketed for sale at a price that is reasonable in relation to its current fair value. • The sale should be expected to be completed within one year of the date of classification. Assets that are to be abandoned or scrapped are not reclassified as Assets Held for Sale.

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When an asset is disposed of or decommissioned, the carrying amount of the asset in the Balance Sheet (whether Property, Plant and Equipment or Assets Held for Sale) is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. Receipts from 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. The balance of receipts is required to be credited to the Capital Receipts Reserve, and can then only be used for new capital investment. 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. xxii. 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. As the Police and Crime Commissioner for Kent is deemed to control the services that are provided under its PFI schemes, and as ownership of the property, plant and equipment will pass to the Police and Crime Commissioner for Kent at the end of the contracts for no additional charge, the Police and Crime Commissioner for Kent carries the assets used under the contracts on its Balance Sheet as part of Non-current assets. 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 Police and Crime Commissioner for Kent. The amounts payable to the PFI operators 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 • 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 – proportion of the amounts payable is posted to the Balance Sheet as a prepayment and then recognised as additions to Property, Plant and Equipment when the relevant works are eventually carried out.

xxiii. Provisions, Contingent Liabilities and Contingent Assets Provisions Provisions are made where an event has taken place that gives the Police and Crime Commissioner for Kent 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 Police and Crime Commissioner for Kent 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 Police and Crime Commissioner for Kent becomes aware of the

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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 Police and Crime Commissioner for Kent settles the obligation. Contingent Liabilities A contingent liability arises where an event has taken place that gives the Police and Crime Commissioner for Kent 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 Police and Crime Commissioner for Kent. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably. Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts. Contingent Assets A contingent asset arises where an event has taken place that gives the Police and Crime Commissioner for Kent 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 Police and Crime Commissioner for Kent. 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. xxiv. Reserves The Police and Crime Commissioner for Kent 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, financial instruments, retirement and employee benefits and do not represent usable resources for the Police and Crime Commissioner for Kent – these reserves are explained in the relevant policies.

xxv. VAT VAT payable is included as an expense only to the extent that it is not recoverable from Her Majesty’s Revenue and Customs. VAT receivable is excluded from income.

Note 2 - Accounting Standards Issued, Not Adopted There are a number of accounting standards that have been issued but not yet adopted: Paragraph 3.3.2.13 of the 2015/16 Code requires changes in accounting policy to be applied retrospectively unless alternative transitional arrangements are specified in the Code. Paragraph 3.3.4.3 requires an 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 by the Code for the relevant financial year. The standards introduced in the 2016/17 Code that are relevant to the requirements of paragraph 3.3.4.3 are: • Amendments to IAS19 Employee Benefits (Defined Benefits Plans: Employee Contributions) • Annual Improvements to IFRSs 2010-2012 Cycle (see Appendix A of the Invitation to Comment (ITC) on the 2016/17 Code for further details – see link below at the end of these bullets)

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• Amendment to IFRS 11 Joint Arrangements (Accounting for Acquisitions of Interests in Joint Operations) • Amendment to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets (Clarification of Acceptable Methods of Depreciation and Amortisation) • Annual Improvements to IFRSs 2012-2014 Cycle (see Appendix B of the ITC on the 2016/17 Code for further details – see link below at the end of these bullets) • Amendment to IAS 1 Presentation of Financial Statements (Disclosure Initiative) • The changes to the format of the Comprehensive Income and Expenditure Statement, the Movement in Reserves Statement and the introduction of the new Expenditure and Funding Analysis • The changes to the format of the Pension Fund Account and the Net Assets Statement

Appendix A (ie the Annual Improvements to IFRSs 2010-2012 Cycle) and Appendix B (ie the Annual Improvements to IFRSs 2012-2014 Cycle) can be found at:

http://www.cipfa.org/policy-and-guidance/consultations-archive/201617-code-of-practice-on-local-authority-accounting-in-the-united-kingdom-invitation-to-comment

Note 3 - Critical Judgements in Applying Accounting Policies In applying the accounting policies set out in Note 1, the Police and Crime Commissioner for Kent has had to make certain judgements about complex transactions or those involving uncertainty about future events. The critical judgements made in the Statement of Accounts are: • There remains some uncertainty about future levels of funding for forces in England and Wales due to the proposed changes to the way the Police Grant is allocated. However, the Police and Crime Commissioner for Kent has determined that this uncertainty is not yet sufficient to provide an indication that the assets of the Police and Crime Commissioner for Kent might be impaired as a result of a need to close facilities and reduce levels of service provision. • The PFI accounting models which calculate the future liabilities for interest and capital repayments are based on the current retail price index (RPIx, which excludes mortgage interest) as listed by the Office of National Statistics. This is reviewed annually, with any change affecting the current year and future years’ charges. • The Pensions liability relating to both Police Officers and staff has been valued in line with the Consumer Price Index as opposed to the Retail Price Index. This change was introduced by the Chancellor of the Exchequer in his Emergency Budget in June 2010. • The Head of Kent and Essex Estates Services, The Head of Transport Services and The Head of Information Services were consulted with regard to any impairment of assets under their jurisdiction in the financial year. Other than the changes to the Estate valuation as part of the annual revaluation process, no other impairment of assets were declared. Please refer to Notes 9, 10 and 33.

Note 4 - Assumptions Made about the Future and Othe r Major Sources of Estimation Uncertainty The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However the nature of estimation means that actual outcomes could differ from those estimates. The key judgements and estimation uncertainty that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities in the next financial year are listed below: Police Pension Schemes (Group Accounts Only) The range of sensitivities regarding the principal assumptions used to measure the combined Police Pension Schemes’ liabilities are set out below: Police Pension Scheme (Schemes Combined)

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Local Government Pension Scheme The sensitivities regarding the principal assumptions used to measure the Local Government Pension Scheme are set out below:














Insurance Provisions

The insurance provision is based on information received from the Police and Crime Commissioner for Kent’s insurers and represents claims against which Kent Police reasonably expects to pay out. Many of these potential claims are estimates based on the opinions of experienced professionals within the industry. Property Plant and Equipment Assets are depreciated over useful lives that are dependent on assumptions about the level of repairs and maintenance that will be incurred in relation to individual assets. The current economic climate makes it uncertain that the Police and Crime Commissioner for Kent will be able to sustain its current spending on repairs and maintenance, bringing into doubt the useful lives assigned to assets. If the useful lives are reduced, depreciation increases and the carrying amount of each asset falls.

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Note 5 - Material Items of Income and Expense As part of the 5 year rolling programme of revaluations Kent Police carried out a revaluation of more than 20% of its’ properties on 1st April 2015. On 31st March 2016 an impairment and market review confirmed those properties valued using Depreciated Replacement Cost showed an average movement of more than 9.4% since 1st April 2015, it was recommended that a revaluation was needed on all properties applying the DRC method. So one was undertaken, which resulted in a £13.8m revaluation gain during the financial period 2015/16. The valuations have been made in accordance with the RICS Valuation Standards 6th Edition (the Red Book) as published by the Royal Institution of Chartered Surveyors, so far as these are consistent with Kent Police accounting policy. The valuation was prepared by Guy Habord FRICS partner in Wilks Head Eve who are an external organisation and have no ties to Kent Police. Non-Distributed Costs & Exceptional Items in the Net Cost of Services section of the Comprehensive Income and Expenditure Statement are comprised of costs which arise for the Police and Crime Commissioner for Kent but are not attributable to individual service segments. This includes Past Service Costs relating to retirement benefits (decisions made in year whose effects are influenced by employee’s service earned in preceding financial years).

Non-Distributed Costs Group

2014/15 PCC

2014/15 Group

2015/16 PCC

2015/16

£’000’s £’000’s £’000’s £’000’s

Past Service Costs relating to retirement benefits 300 0 1,019 0 Curtailments and settlements relating to retirement benefits Inc Above 0 Inc Above 0

Impairment on Icelandic Bank investments (462) (462) (127) (127)

Total Non-Distributed Costs (162) (462) 892 (127)

The Comprehensive Income and Expenditure Statement for the year ended 31st March 2016 does not include capital expenditure or show any detail around the income received from disposal of surplus non-current assets. The following table provides analysis of both expenditure and income for the year. The Police and Crime Commissioner for Kent have a 5-year medium term capital programme that is supported by the Estate and Information Systems Strategies and a vehicle renewal programme. The 5-year programme is funded from capital grants, capital receipts and contributions from the revenue account. Capital expenditure during 2015/16 was £10.1m as follows:

Nature of expenditure £’000’’s

Estates 773

IT 5,513

Vehicles and equipment 3,861

Total 10,147

Major acquisitions and disposals in 2015/16 Group £’000’s

Acquisitions

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Project Athena 1,772

Vehicle replacement programme 1,677

SAP Licences & Upgrades 1,078

Body Worn Video - Stage 2 710

Disposals

Invicta House Northfleet 950

190 Shepherds Lane, Dartford 535

Chestnuts, Shorne 483

Note 6 - Events After the Balance Sheet Date No events to report after the balance sheet date. Note 7 - Adjustments between Accounting Basis and F unding Basis under Regulations This note details the adjustments that are made to the total comprehensive income and expenditure recognised by the Police and Crime Commissioner for Kent in the year in accordance with proper accounting practice to the

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resources that are specified by statutory provisions as being available to the Police and Crime Commissioner for Kent to meet future capital and revenue expenditure. GROUP

2015/16 General

Fund

Useable Capital

Receipts Reserve

Earmarked Reserves

Total Useable Reserves


£’000’s £’000’s £’000’s £’000’s £’000’s


Capital grants & contributions applied (2,317) 2,317 0 0 0

Reversal of amortisation of tangible and intangible assets 627 0 0 627 (627)

Reversal of charges for depreciation & impairment 6,283 0 0 6,283 (6,283)

Revenue contribution towards Capital Reserves 0 0 0 0 0

Reversal of gains or losses on revaluation charged / credited to the Comprehensive Income and Expenditure Account.

70 0 0 70 (70)

Revaluation Gains on PPE (3,410) 0 0 (3,410) 3,410

Amount of Non-current assets written off on disposal 3,954 0 0 3,954 (3,954)

Capital Expenditure financed from capital receipts 0 (10,148) 0 (10,148) 10,148

Capital grants credited to the Comprehensive Income & Expenditure Account

0 0 0 0 0

MRP Charged to Comprehensive Income & Expenditure Account

(805) 0 0 (805) 805

Donated Assets (304) 0 0 (304) 304

Usable Capital Receipts Reserve Transfer cash proceeds on asset disposals to capital receipts reserve (4,469) 4,469 0 0 0

Transfer To / From Reserves 0 0 0 0 0

Transfers to Capital Financing requirement (14) 14 0 0 0

Pensions Reserve

Reversal of pension charges made during the year (85,169) 0 0 (85,169) 85,169

Pension payments appropriated to the pension reserve 189,750 0 0 189,750 (189,750)

Collection Fund Adjustment Account 0 0 0 0 0

Reversal of Collection Fund Adjustments (553) 0 0 (553) 553

Accumulated Compensated Absences Account

Reversal of leave accrual (63) 0 0 (63) 63

Financial Instruments Adjustment Account

Impairments 0 0 0 0 0

Total 103,582 (3,348) 0 100,234 (100,234)

This shows that due to prudent management of the Police and Crime Commissioner for Kent’s financial resources there is no impact on the General Fund balance for the year. Net expenditure for the year is therefore covered by non-specific grants and taxation.

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2014/15 General

Fund

Useable Capital

Receipts Reserve

Earmarked Reserves

Total Useable Reserves


£’000’s £’000’s £’000’s £’000’s £’000’s


Capital grants & contributions applied (2,572) 2,572 0 0

Reversal of amortisation of intangible assets 699 699 (699)

Reversal of charges for depreciation & impairment 5,994 5,994 (5,994)

Revenue contribution towards Capital Reserves (31) 31 0 0


54,912 54,912 (54,912)

Revaluation Gains on PPE 0 0 0

Amount of Non-current assets written off on disposal 2,248 2,248 (2,248)

Capital Expenditure financed from capital receipts (7,087) (7,087) 7,087


0 0


(1,363) (1,363) 1,363

Donated Assets 0 0 0

Usable Capital Receipts Reserve Transfer cash proceeds on asset disposals to capital receipts reserve

(2,050) 2,050 0 0

Transfer To / From Reserves (7,726) 7,726 0 0

Transfers to Capital Financing requirement 0 0 0 0

Pensions Reserve

Reversal of pension charges made during the year (72,550) (72,550) 72,550

Pension payments appropriated to the pension reserve 203,585 203,585 (203,585)

Collection Fund Adjustment Account

Reversal of Collection Fund Adjustments (947) (947) 947

Accumulated Compensated Absences Account

Reversal of leave accrual (216) (216) 216


Impairments (160) (160) 160

Total 179,823 5,293 0 185,116 (185,116)

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Police & Crime Commissioner

2015/16 General

Fund

Useable Capital

Receipts Reserve

Earmarked Reserves

Total Useable

Reserves


£’000’s £’000’s £’000’s £’000’s £’000’s


Capital grants & contributions applied (2,317) 2,317 0 0 0

Reversal of amortisation of intangible assets 627 0 0 627 (627)

Reversal of charges for depreciation & impairment 6,283 0 0 6,283 (6,283)

Revenue contribution towards Capital Reserves 0 0 0 0 0


70 0 0 70 (70)

Revaluation Gains on PPE (3,410) 0 0 (3,410) 3,410

Amount of Non-current assets written off on disposal 3,954 0 0 3,954 (3,954)

Capital Expenditure financed from capital receipts 0 (10,148) 0 (10,148) 10,148

Capital grants credited to the Comprehensive Income & Expenditure Account 0 0 0 0 0


(805) 0 0 (805) 805

Donated Assets (304) 0 0 (304) 304

Usable Capital Receipts Reserve

Transfer cash proceeds on asset disposals to capital receipts reserve

(4,469) 4,469 0 0 0

Transfer To / From Reserves 0 0 0 0 0

Transfers to Capital Financing requirement (14) 14 0 0 0


Reversal of Collection Fund Adjustments (553) 0 0 (553) 553


Impairments 0 0 0 0 0

Total (938) (3,348) 0 (4,286) 4,286

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2014/15 General

Fund

Useable Capital

Receipts Reserve

Earmarked Reserves

Total Useable

Reserves


£’000’s £’000’s £’000’s £’000’s £’000’s


Capital grants & contributions applied (2,572) 2,572 0 0

Reversal of amortisation of intangible assets 699 699 (699)

Reversal of charges for depreciation & impairment 5,994 5,994 (5,994)

Revenue contribution towards Capital Reserves (31) 31


54,912 54,912 (54,912)

Revaluation Gains on PPE 0 0 0

Amount of Non-current assets written off on disposal 2,248 2,248 (2,248)

Capital Expenditure financed from capital receipts (7,087) (7,087) 7,087


0 0


(1,363) (1,363) 1,363

Donated Assets 0 0 0

Usable Capital Receipts Reserve Transfer cash proceeds on asset disposals to capital receipts reserve

(2,050) 2,050 0 0

Transfer To / From Reserves (7,726) 7,726 0 0


Reversal of Collection Fund Adjustments (947) (947) 947


Impairments (160) (160) 160

Total 49,003 5,293 0 54,297 (54,297)

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Note 8 - Transfers to/from Earmarked Reserves This note sets out the amounts set aside from earmarked reserves to provide financing for future expenditure plans and the amounts posted back from earmarked reserves to meet General Fund expenditure in 2015/16.

As at 31st March 2014

Transfers in

Transfers out


Transfers in

Transfers out


£’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s

General Fund 5,640 0 0 5,640 0 0 5,640

Risk

Localisation of Council Tax Benefit Reserve

900 0 0 900 0 (200) 700

Public Order & Major Investigation Reserve

0 2,000 0 2,000 0 0 2,000

Grant Cut Volatility Reserve

4,259 8,155 (5,453) 6,962 1,652 (4,614) 4,000

Insurance 3,098 0 0 3,098 0 0 3,098

Compass House Renewals Fund

200 0 200

Change

Invest to save 1,919 0 0 1,919 0 0 1,919 Redundancy, Relocation & Regulation A20 6,000 2,637 (2,637) 6,000 0 0 6,000

Policing Opportunity

Policy Opportunities 5,200 0 (117) 5,083 800 0 5,883

POCA Incentivisation 601 200 (216) 586 997 (802) 781

Policing Opportunity Other:

Budget Roll Forward / PSA1

1,020 0 (931) 89 1,235 (710) 614

Custody Review 1,800 0 0 1,800 0 (1,800) 0

Op Morris - Vehicle Seizure

90 0 0 90 0 0 90

KIRAT Grant 0 194 0 194 2 (196) (0)

Ministry of Justice 636 0 (636) 0 0 0 0

Total 31,163 13,186 (9,990) 34,360 4,886 (8,322) 30,924

Note 9 - Property, Plant and Equipment

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Land &

Buildings

Vehicles, Plant &

Equipment

Surplus Assets

Assets under Construction Total

£’000’s £’000’s £’000’s £’000’s £’000’s Cost or Valuation

At 1st April 2015 158,874 46,510 3,502 2,773 211,657 Reclassifications of Investment Properties

(620) 0 0 0 (620)

Reclassifications of Surplus Assets 0 0 0 0 0

Reclassifications of AUC 325 4 0 (3,101) (2,772)

Reclassifications of Held for Sale (400) 0 (315) 0 (715)

Additions 0 4,517 0 773 5,290

De-recognition - disposals (295) (2,589) 0 0 (2,884)

Revaluation increases / (decreases) recognised in the Revaluation Reserve

13,807 0 164 0 13,971

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

2,377 0 15 0 2,390

Assets Not adding value - recognised in RR

(259) 0 0 0 (259)

Assets Not adding value - recognised in I&E

(66) (4) 0 0 (70)

As at 31st March 2016 173,743 48,438 3,366 445 225,989

Accumulated Depreciation & Impairment

At 1st April 2015 (2,450) (30,797) (53) 0 (33,301)

Depreciation for the year (2,475) (3,753) (56) 0 (6,284)

Depreciation on disposals 9 2,065 0 0 2,074

DPN written out to the Revaluation Reserve

1,900 0 53 0 1,953

DPN written out to the I&E 332 0 0 0 332

Depreciation on reclassification of surplus assets 0 0 0 0 0

Depreciation on reclassification of Investment properties

20 0 0 0 20

Depreciation on reclassification of asset held for sale

13 0 5 0 18

At 31st March 2016 (2,651) (32,485) (51) 0 (35,188)

Net Book Value

At 31st March 2016 171,090 15,952 3,315 445 190,802

At 31st March 2015 156,423 15,712 3,449 2,773 178,357

Comparative Movements in 2014/15

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Land &

Buildings

Vehicles, Plant &

Equipment

Surplus Assets

Assets under Construction Total

£’000’s £’000’s £’000’s £’000’s £’000’s

Cost or Valuation

At 1st April 2014 194,321 49,165 5,921 0 249,407 Reclassifications of Investment Properties

0 0 0 0 0

Reclassifications of Surplus Assets 0 170 (1,819) 1,649 0

Reclassifications of AUC 338 0 0 (338) 0

Reclassifications of Held for Sale (730) 0 (1,245) 0 (1,975) Additions 0 5,162 0 1,462 6,624

De-recognition - disposals 0 (7,987) (788) 0 (8,775) Revaluation increases / (decreases) recognised in the Revaluation Reserve

23,619 0 1,606 0 25,225

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

(58,339) 0 (173) 0 (58,512)

Assets Not adding value - recognised in RR

0 0 0 0 0

Assets Not adding value - recognised in I&E

(335) 0 0 0 (335)

As at 31st March 2015 158,874 46,510 3,502 2,773 211,657

Accumulated Depreciation & Impairment

At 1st April 2014 (14,582) (34,451) (234) 0 (49,267)

Depreciation for the year (2,458) (3,450) (86) 0 (5,994)

Depreciation on disposals 0 7,139 39 0 7,177

DPN written out to the Revaluation Reserve

10,547 0 171 0 10,717

DPN written out to the I&E 4,035 0 0 0 4,035

Depreciation on reclassification of surplus assets

0 (35) 35 0 0

Depreciation on reclassification of Investment properties

0 0 0 0 0

Depreciation on reclassification of asset held for sale

8 0 22 0 30

At 31st March 2015 (2,450) (30,797) (53) 0 (33,301)

Net Book Value

At 31st March 2015 156,423 15,712 3,449 2,773 178,357

At 31st March 2014 179,739 14,714 5,687 0 200,140

The entire Kent Police estate was revalued for the 2014/15 Statement of Accounts on 1st April 2014 and more than 20% revalued for the 2015/16 accounts on 1st April 2015 as part of the 5 year rolling programme of revaluations as specified by CIPFA. Following an impairment and market review on 31st March 2016 an additional revaluation on all Depreciated Replacement Cost Assets was carried out on 31st March 2016.

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The valuations have been made in accordance with the RICS Valuation Standards 6th Edition (the Red Book) as published by the Royal Institution of Chartered Surveyors, so far as these are consistent with Kent Police accounting policy. The valuation was prepared by Guy Habord FRICS partner in Wilks Head Eve who are an external organisation and have no ties to Kent Police. Useful lives vary between classes of asset but are summarised in the table below.

Asset Class Useful life

Land unlimited

Buildings 8 – 60 years

Plant & Equipment 1 – 40 years

Vehicles 3 – 5 years

Van trailers 10 years

Note 10 - Investment Properties The following items of income and expense have been accounted for in the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement:

2014/15 2015/16

£’000’s £’000’s

Rental income from investment properties 35 35

Net gain / (loss) from fair value adjustments (36) 688

The Police and Crime Commissioner for Kent has no contractual obligations to purchase, construct or develop investment property or repairs, maintenance or enhancement. The following table summarises the movement in the fair value of investment properties over the year:

2014/15 2015/16

£’000’s £’000’s

At 1st April 6,756 6,720

Additions:

- Purchases 0 0

- Subsequent expenditure 0 0

Disposals 0 (1,185)

Net gain / loss from fair value adjustments (36) 688

Transfers:

- to / from inventories 0 0

- to / from Property, Plant & Equipment 0 600

- to / from Assets held for sale 0 0

Other Changes – sale of properties 0 0

At 31st March 6,720 6,823

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Note 11 - Intangible Assets The Police and Crime Commissioner for Kent accounts for its software as intangible assets, to the extent that the software is not an integral part of a particular IT system and accounted for as part of the hardware item of Property, Plant and Equipment. The intangible assets include both purchased licenses and internally generally software. All software is given a finite useful life, based on assessments of the period that the software is expected to be of use to the Police and Crime Commissioner for Kent. The useful lives assigned to the major software suites used by the Police and Crime Commissioner for Kent are:

Internally Generated Assets Other Assets

0 - 3 years None

BES12 Licences for mobile policing, Data Consultancy for Special Branch project

4 - 6 years

None

SAP Licences & Upgrade, Analytics Software, Public Service Network (PSN) Consultancy, Single Desktop Programme (Microsoft Office upgrade), Joint Network Replacement, Mobile Data Terminal Licences

7 - 10 years

Locard (the PCC for Kent’s forensic management system); Disaster Recovery

Covert Communications Data Capture, Smartcall (Force Control Room software) , ANPR (Automatic Number Plate Recognition) Software Upgrade, Socrates (Forensic Case Management System) and Oracle Licences

11 – 15 years

None Data Software Application for Project Platinum

The carrying amount of intangible assets is amortised on a straight-line basis. The amortisation of £627k was charged to revenue in 2015/16, charged to the IT cost centres and then absorbed as an overhead across all the service headings in the Net Expenditure of Services. IT costs are apportioned according to the number of staff in each segment of service so the proportions are as follows:

Percentage Amount

£’000’s

Local Policing 45% 282

Dealing with the public 11% 69

Criminal Justice 9% 57

Roads Policing 3% 19

Specialist Operations 4% 25

Intelligence 5% 31

Specialist Investigations 15% 94

Investigative Support 2% 13

National Policing 5% 31

Corporate & Democratic Core 1% 6

Non-distributed costs 0% 0

Total 100% 627

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The movement on Intangible Asset balances during the year is as follows:

2014/15 2015/16

Internally generated

assets

Other Assets Total

Internally generated

assets

Other Assets

Intangible assets under

development

Total

£’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s

At 1st April

Gross carrying amounts 796 5,604 6,400 796 6,067 0 6,863

Accumulated amortisation (770) (3,523) (4,293) (778) (4,214) 0 (4,992) Net carrying amount at the start of year 27 2,080 2,107 18 1,853 0 1,871

Additions: Reclassifications of Assets under Development

0 0 0 0 0 2,773 2,773

Internal development 0 0 0 0 0 0 0

Purchases 0 463 463 0 1,884 2,973 4,857 Assets reclassified as held for sale

0 0 0 0 0 0 0

Other disposals 0 0 0 0 (83) 0 (83) Revaluation increases or decreases

0 0 0 0 0 0 0

Impairment losses recognised or reversed directly in the Revaluation Reserve

0 0 0 0 0 0 0

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

0 0 0 0 0 0 0

Reversals of past impairment losses written back to the Surplus / Deficit on the Provision of Services

0 0 0 0 0 0 0

Amortisation for the period (8) (690) (699) (8) (619) 0 (627)

Other changes 0 0 0 0 79 0 79 Net carrying amount at the end of the year 18 1,853 1,871 10 3,113 5,746 8,869

Comprising

Gross carrying amounts 796 6,067 6,863 796 7,867 5,746 14,409

Accumulated amortisation (778) (4,214) (4,992) (786) (4,754) 0 (5,540)

Total 18 1,853 1,871 10 3,113 5,746 8,869 Note 12 - Financial Instruments The term financial instrument refers to any contract that gives rise to a financial asset or liability with the Police and Crime Commissioner for Kent. For Kent Police this includes temporary investments, trade debtors and creditors as well as the Insurance Provision and Finance Leases. Financial Instruments Balances The following categories of financial instruments are carried in the Balance Sheet.

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Loans and Receivables

Loans and Receivables 31st March 2015 (£000's) 31st March 2016 (£000's)

Long term Short term Long term Short term

Investments

Cash (3,732) 0 (5,389)

Other 425 73,239 425 76,225

Debtor 505 12,127 439 6,734

Total 930 81,634 864 77,570 Financial Liabilities at amortised costs

Financial Liabilities at 31st March 2015 (£000's) 31st March 2016 (£000's)

amortised costs Long term Short term Long term Short term

PFI Liability (45,040) (727) (43,751) (1,289)

Creditors (16,613) 0 (17,340)

(45,040) (17,340) (43,751) (18,629)

Fair value The carrying amount of the short term loans and receivables are a reasonable approximation of their fair values and the decision for not disclosing their fair value for the short term loans and receivables complies with the Code. The disclosure of the fair values of the PFI liability and long term loans and receivables can be seen below:

Financial 31st March 2015 (£000's) 31st March 2016 (£000's)

Instruments Carrying amount Fair value Carrying

amount Fair value

Financial Liabilities:

PFI Long Liability (45,040) (70,245) (43,751) (67,318)

PFI Short Liability (727) (727) (1,289) (1,289)

Police Loan 505 505 439 439

Investment at cost 425 425 425 425

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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 Liabilities Financial Assets

Liabilities measured at

amortised cost

Loans and receivables

Available-for-sale assets Total

£’000 £’000 £’000 £’000

Interest expense 6 0 0 6

Loss on de-recognition 104 0 0 104

Impairment losses 0 0 0 0

Interest payable and similar charges 110 0 0 110

Interest income 0 0 587 587

Discounting of financial assets

0 0 0

Impairment of assets (see below) 0 0 (3,342) (3,342)

Interest and investment income 0 0 (2,755) (2,755)

Icelandic Investments In 2008, the Kent Police Authority (now the Police and Crime Commissioner for Kent) invested £11.1m in Icelandic bank deposits. In October that year, the Icelandic banks Landsbanki, Kaupthing and Glitnir collapsed and the UK subsidiaries of the banks, Heritable and Kaupthing Singer and Friedlander went into administration.

Over recent years a significant amount of the initial investment has been repaid, and the Police and Crime Commissioner now only holds a small investment in Glitnir of £419k, representing funds transferred by the Glitnir Winding Up board to a specific Escrow account.

A summary of the initial investments, showing amounts deposited, repayments to date and amounts written off is shown below:

Bank Date Invested

Original Interest

Rate

Amount Invested

Amount Repaid

Impairment (written off)

Current Investment

(£’000's) (£’000's) (£’000's) (£’000's)

Glitnir 28/08/2008 6.84% 2,000 1,581 0 419

Heritable 30/09/2008 6.15% 2,000 1,960 40 0

Heritable 25/09/2008 6.18% 1,200 1,176 24 0

Landsbanki 30/09/2008 6.15% 2,000 1,853 147 0

Landsbanki 18/09/2008 6.00% 1,000 926 74 0

Landsbanki 08/02/2008 5.40% 2,900 2,687 213 0

Total 11,100 10,183 498 419

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Glitnir Bank hf The remaining balance of £419k is now held in the Glitnir Winding Up Board escrow account which is accruing interest for the benefit of local authorities at a rate of 3.4% up to June 2012 and 4.2% thereafter. Advice from the latest CIPFA Local Authority Accounting Bulletin specifies that this deposit should be considered a new investment in its own right. The current value of this separate investment is £416k – however, as this change in value is not material, no adjustments have been made to the carrying value for interest accrued or exchange rate differences. Heritable Bank On the 3rd September 2015, Heritable bank paid a further dividend of £127.4k, which has reduced the overall write off to only £64k – 2% of the original debt. LBI formerly Landsbanki The Landsbanki debt was sold in November 2014 realising a loss of £434k – 7.36% on the initial in investment.

Note 13 – Short Term Debtors

31st March

2015 31st March

2016

£’000’s £’000’s

Central Government bodies 12,913 16,767

Other Local Authorities 6,045 2,980

Payments in Advance 1,560 2,516

Staff Advance 151 130

Other Entities and Individuals 3,349 8,896

Total 24,018 31,289

Note 14 - Cash and Cash Equivalents The balance of cash and cash equivalents is made up of the following elements:

31st March

2015 31st March

2016

£’000’s £’000’s

Cash held by the PCC for Kent and Bank current accounts (3,732) (5,389)

Short term deposits held by banks, local authorities and Building Societies 26,950 12,237

Total Cash & Cash Equivalents 23,218 6,848 The Police and Crime Commissioner for Kent also hold monies on behalf of third parties arising from its operational responsibilities. The cash amounts, not included in the above Balance Sheet totals, are as follows: See Note 16.

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31st March

2015 31st March

2016

£’000’s £’000’s Proceeds of Crime Act monies (POCA) 2,786 1,947

Prisoners' property and lost cash 456 532

Other 176 155

Total 3,418 2,634

Note 15 - Assets Held for Sale

Current

2014/15 2015/16

£’000’s £’000’s

As at 1st April 850 2,081

Assets newly classified as held for sale

- Property, Plant & Equipment 1,945 0

Revaluation losses (64) 0

Revaluation gains 0 0

Impairment losses 0 0

Assets declassified as held for sale 0 0

- Property, Plant & Equipment 0 0

Assets sold (650) (1,945)

Transfers from non-current to current 0 697

Other movements 0 0

As at 31st March 2,081 833

Note 16 – Short Term Creditors

Note 31st March

2015 31st March

2016

£’000’s £’000’s

Short-term accumulating compensated absences (i) 2,583 2,520

Central Government bodies 4,629 14,440

Other local authorities 2,812 6,342

NHS Bodies 43 1

Receipts in advance 2,775 1,886

Other entities and individuals 8,159 10,837

Group Sub-total 21,001 36,026

Repayments due on PFIs within 1 year (see note 32) 727 1,289

Group Total 21,728 37,315

(i) Short term accumulating absences are part of the Chief Constable's accounts only. All other creditors form part of the PCC single entity accounts and those of the Group.

The Police and Crime Commissioner for Kent held £1.9m of monies in trust under the proceeds of Crime Act 2002 (2014/15 - £2.8m). This money was seized and banked under powers granted by the act and will be paid

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over to the Government on the conclusions each successful prosecution. If defendants are found not guilty or no charges are made, the money is returned to the person(s) it was seized from.

In addition to this a further £0.7m was held in trust in relation to prisoners property and deceased persons (2014/15 - £0.6m).

The above amounts have been excluded from the Balance Sheet as both Assets (Cash and Cash equivalents) and also Liabilities (Creditors). Note 17 – Long Term Creditors

31st March

2015 31st March

2016

£’000’s £’000’s

PFI Long Term Liability 45,040 43,751

Capital Finance Lease 467 389

Total 45,507 44,140 Note 18 – Provisions A provision is a liability representing an amount set aside by the Police and Crime Commissioner for Kent for specific events or known costs which can be quantified with a degree of accuracy and which the Police and Crime Commissioner for Kent is reasonably certain it will have to pay. Specific provisions have been made for insurance claims plus reversal of the provision made for the pension top up grant in 2014/15 as this is no longer a provision:

Provisions include: Outstanding legal cases, injury & damage compensation claims

2014/15 2015/16

£’000’s £’000’s

Balance as at 1st April 2015 12,946 12,892

Additional provisions made in 2015/16 771 698

Claims paid in 2015/16 (825) (10,518)

Closing balance as at 31st March 2016 12,892 3,072 The insurance provision is split between amounts expected to be paid within one year 2015/16 - £1.210m (2014/15 - £1.225m) and those expected to be payable after one year 2015/16 £1.407m (2014/15 - £1.805m).

The pension top up grant provision in 2014/15 relates to the repayment of top up grant incorrectly claimed from the Home Office between 2006/07 and 2013/14. This amount has been confirmed and is recorded as a creditor in 2015/16.

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Note 19 - Usable Reserves Movements in the Police and Crime Commissioner for Kent’s usable reserves are detailed in the Movement in Reserves Statement and note 7.

31st March

2015 31st March

2016 £’000’s £’000’s

General Fund 5,640 5,640

Risk

Localisation of Council Tax Benefit Reserve 900 700

Public Order & Major Investigation Reserve 2,000 2,000

Grant Cut Volatility Reserve 6,962 4,000

Insurance 3,098 3,098

Compass House Renewals Fund 0 200

Change

Invest to save 1,919 1,919 Redundancy, Relocation & Regulation A20 6,000 6,000

Policing Opportunity

Policy Opportunities 5,083 5,883

Capital Reserve Capital Contributions Unapplied Reserves 25,768 31,594

POCA Incentivisation 586 781

Other 2,173 704

Total 60,129 62,519

Capital Contributions Unapplied Reserve 31st March

2015 31st March

2016 £’000’s £’000’s

Balance at 1 st April 119 119

Receipts and transfers during the year 24 230

Financing of non-current assets (24) (102)

Balance at 31 st March 119 247

Capital Reserve 31st March

2015 31st March

2016 £’000’s £’000’s

Balance at 1st April 30,219 25,649

Transfer from Earmarked Reserves (1,631) 9,174

Transfer from Revenue (475) 293

Proceeds of disposals 2,620 6,277

Financing of non-current assets (6,722) (10,046)

Balance at 31 st March 25,649 31,347 General Fund The General Fund Reserve is set at a minimum of 2% of net revenue expenditure.

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Localisation of Council Tax Benefit Reserve It is anticipated that Kent Police will incur additional cost from changes to council tax benefits. A reserve has been created to mitigate these costs. Public Order and Major Investigation Reserve The Commissioner agreed for this reserve to be created to mitigate any possible future costs of significant public order events and major investigations in the county. Grant Cut Volatility Reserve The Police and Crime Commissioner for Kent has transferred a proportion of the previous years’ underspend to this reserve in order to provide for anticipated budget shortfalls over the medium term given the volatile nature of public grant funding. Insurance This reserve has been set up to provide for any additional insurance costs falling on the Police and Crime Commissioner for Kent over and above those already specifically provided for. See note 18. Compass House Renewals Fund Compass house is a facility in Kent opened in April 2015 to provide and co-ordinate services for victims and witnesses of crime. This reserve is intended to ensure the longevity of the facility without impacting on the maintenance and repair revenue budgets of Kent Police. Invest to Save This reserve will be used to fund projects or schemes which yield savings for the Police and Crime Commissioner for Kent in excess of the cash outlay required to deliver the savings. These projects are agreed at a strategic level and deliver on-going cashable savings. The Commissioner invites the Chief Constable to make bids against this in the year 2016/17. Redundancy, Relocation and Regulation A20 The Police and Crime Commissioner for Kent have agreed to create a reserve to off-set potential costs relating to the re-structuring of the Service following significant budget reductions over the medium term. Policy Opportunities The Police and Crime Commissioner for Kent has agreed to use a proportion of previous years underspends to provide a reserve which they intend to use to support visible policing and related initiatives. Capital Reserves This reserve is built up from contributions from revenue, the sale of surplus non-current assets and assets held for sale. The funds received from disposal of non-current assets can only be used for capital expenditure, whereas transfer from revenue can be used for either capital or revenue. Proceeds of Crime Act Incentivisation This reserve shows the amount the Police and Crime Commissioner for Kent has received from the Government as a proportion of the assets seized under the Proceeds of Crime Act 2002. It has been agreed that this money will be used to fund additional resources to increase asset seizures. Other Includes the following: • Budget Roll Forward – The Police and Crime Commissioner for Kent has held a proportion of a previous

year’s underspend in this reserve in order to fund projects that either straddle financial years or did not start until 2016/17.

• Proceeds of Crime Act Incentivisation – This reserve shows the amount the Police and Crime Commissioner for Kent has received from the Government as a proportion of the assets seized under the Proceeds of Crime

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Act 2002. It has been agreed that this money will be used to fund additional resources to increase asset seizures.

• Police and Crime Commissioner Change Capacity Reserve – This reserve was created to provide one off resources to assist the Force in transformational processes such as digitalisation and demand reduction.

• Op Morris – A self-funding operation across Kent Police and Essex Police designed to disrupt offending behaviour by depriving offenders of their vehicle.

Note 20 - Unusable Reserves Movements in the Police and Crime Commissioner for Kent’s unusable reserves are detailed in the Movement in Reserves Statement on page 22.

Unusable Reserves 31st March

2015 31st March

2016

£’000’s £’000’s

Revaluation Reserve 35,495 49,956

Pensions Reserve (Group only) (3,424,802) (2,979,534)

Capital Adjustment Account 108,634 113,573

Financial Instruments Adjustment Account (12) (12)

Collection Fund Adjustment Account 2,073 2,626

Short term accumulated compensated absences account (Group only) (2,583) (2,520)

Total (3,281,196) (2,815,911)

Revaluation Reserve The Revaluation Reserve contains the gains made by the Police and Crime Commissioner for Kent arising from increases in the value of its Property, Plant and Equipment [and Intangible Assets]. The balance is reduced when assets with accumulated gains are: • revalued downwards or impaired and the gains are lost • used in the provision of services and the gains are consumed through depreciation, or • disposed of and the gains are realised.

Revaluation Reserve 2014/15 2015/16

£’000’s £’000’s

At 1st April 45,385 35,495

Restatement to CAA (45,385) 0

Upward revaluation of assets 35,942 15,665

Downward revaluation of assets and impairment losses not charged to the Surplus / Deficit on the Provision of Services

0 0

Difference between fair value of depreciation and historical cost depreciation

(447) (692)

Accumulated gains on assets sold or scrapped 0 0

Amount written off to the Capital Adjustment Account 0 (512)

Transfer to Capital Adjustment Account (CAA) 0 0

Additional adjustments - Gravesend 0 0

At 31st March 35,495 49,956 Pensions Reserve (Group Accounts Only)

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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 Police and Crime Commissioner for Kent 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 Police and Crime Commissioner for Kent makes employer’s contributions to pension funds or eventually pays any pensions for which it is directly responsible. The balance on the Pensions Reserve therefore shows a substantial shortfall in the benefits earned by past and current employees and the resources the Police and Crime Commissioner for Kent 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.

Pensions Reserve 2014/15 2015/16

£’000’s £’000’s

At 1st April (2,811,831) (3,424,802)

Actuarial gains or losses on pensions assets and liabilities (481,936) 549,849 Reversal of items relating to retirement benefits debited or credited to the surplus or deficit on the Provision of Services in the Comprehensive Income & Expenditure Account

(203,585) (189,750)

Employer’s pension contributions and direct payments to pensioners payable in the year

72,550 85,169

At 31st March (3,424,802) (2,979,534) Capital Adjustment Account 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 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 Police and Crime Commissioner for Kent as finance for the costs of acquisition, construction and enhancement. The Account contains accumulated gains and losses on Investment Properties and gains recognised on donated assets that have yet to be consumed by the Police and Crime Commissioner for Kent. The Account also contains revaluation gains accumulated on Property, Plant and Equipment before 1 April 2014, the date that the Revaluation Reserve was reset to hold such gains. Note 7 provide details of the source of all the transactions posted to the Account, apart from those involving the Revaluation Reserve.

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Capital Adjustment Account 2014/15 2015/16

£’000’s £’000’s

At 1st April 118,205 108,634

Revaluation Reserve reset to zero at 1 April 2014 following full revaluation of all properties - prior year balance transferred to CAA 45,385 0

Additional adjustments for IFRS

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

· Charges for depreciation and impairment of non-current assets (5,994) (6,284) · Charges for Impairment / rev loss (54,912) (70) · Revaluation Gains/(Losses) on Property, Plant & Equipment 0 3,412 · Amortisation of intangible assets (699) (627)

· Amount 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

(2,248) (3,952) · Donated Assets 0 304

Adjusting amounts written out of the Revaluation Re serve: · Net written out amount of the cost of non-current assets consumed in the year 447 1,204 Capital financing applied in the year: · Use of Capital Reserve to finance new capital expenditure 4,514 7,959 · Capital grants and contributions credited to the Comprehensive Income and

Expenditure Statement that have been applied to capital financing 2,572 2,188 · Capital repayment on PFI 1,363 805 Movements in the market value of debited or credited to the Comp rehensive Income & Expenditure Statement: · Investment Properties 0 0 · Assets Held for Sale 0 0 · Transfer from Revaluation Reserve 0 0 Movement in the Donated Assets Account credited to the Comprehensive Income & Expenditure Statement: 0

· Recognition of Heritage Assets 0 0 At 31st March 108,634 113,573

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

Financial Instruments Adjustment Account 2014/15 2015/16

£’000’s £’000’s At 1st April (172) (12)

Reversal of prior year entries

· Discounting Police Pay Loan 12 12

· Interest accrual on frozen Icelandic bank deposits (301) 0

· Impairment in frozen Icelandic bank deposits 461 0

Current year entries

· Discounting Police Pay Loan (12) (12)

· Interest accrual on frozen Icelandic bank deposits 0 0

· Impairment in frozen Icelandic bank deposits 0 0

· Actual Impairment written out 0 0

At 31st March (12) (12) Collection Fund Adjustment Account The Collection Fund Adjustment Account manages the differences arising from the recognition of council tax income in the Comprehensive Income and Expenditure Statement as it falls due from council tax payers compared with the statutory arrangements for paying across amounts to the General Fund from the Collection Fund. This reflects the Police and Crime Commissioner for Kent’s share of the any under or over payments and potential bad debts relating to non-payment of Council Tax to Local Authorities.

Collection Fund Adjustment Account 2014/15 2015/16

£’000’s £’000’s

At 1st April 1,126 2,073

Amount by which Council Tax Income credited to the Comprehensive Income & Expenditure Statement are different from the cost of settlements chargeable in the year in accordance with statutory requirements.

947 553

At 31st March 2,073 2,626 Short-term Accumulated Absences Account (Group Acco unts Only) The Accumulated Absences Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year, e.g. annual leave entitlement and time off in lieu of payment carried forward at 31 March. Statutory arrangements require that the impact on the General Fund Balance is neutralised by transfers to or from the Account.

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Short-term Accumulated Absences Account 2014/15 2015/16

£’000’s £’000’s

At 1st April (2,799) (2,583)

Unused amounts reversed in year 2,799 2,583

Additional liability calculated in year (2,583) (2,520)

At 31st March (2,583) (2,520)

Note 21 – Cash Flow Statement

Adjustments to net surplus / deficit on the provision for non-cash movements

2014/15 2015/16 2015/16

Group Group PCC

£’000’s £’000’s £’000’s

Depreciation on non-current assets (5,994) (6,284) (6,284)

Amortisation of intangible assets 699 (627) (627) Reversals of previous impairments and upwards revaluations of investment properties

(54,912) 3,341 3,341

Increase / (decrease) in long term debtors (72) (67) (67)

(Increase) / decrease in creditors 6,481 (15,025) (15,086)

Increase / (decrease) in debtors (1,640) 7,271 7,271

Increase / (decrease) in stock (144) (18) (18)

(Increase) / decrease in provisions 54 9,821 9,821

Pensions liability (131,035) (104,581) 0

Carrying amount of non-current assets sold (2,229) (3,954) (3,954)

Material impairment losses on investments debited to CI&E in year 0 0 0

Other non-cash items to be charged to the net surplus on the provision of services

(1,934) 0 0

Reversal of proceeds of sales of non-current assets 2,078 0 0

Reversal of capital grants and contributions (see note 30) 2,572 0 0

Total (186,075) (110,123) (5,603)

Adjustments for items in the net surplus or deficit on the provision of services that are investing or financing activities

2014/15 2015/16 2015/16

Group Group PCC

£’000’s £'000 £’000’s

Proceeds from the sale of property, plant and equipment, investment property and intangible assets

1,997 4,469 4,469

Insurance Refund 81 78 78

Interest Received 441 591 591

Interest Paid (304) (4) (4)

Capital Grants applied 2,572 2,188 2,188

Total 4,787 7,322 7,322

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Note 22 – Cash Flow Statement - Investing Activitie s

Investing Activities

2014/15 2015/16 2015/16

Group Group PCC

£’000’s £’000’s £’000’s

Purchase of property, plant & equipment, investment assets and intangible assets

7,087 10,148 10,148

Purchase of short-term and long-term investments

433,062 502,864 502,864

Other payments for investing activities 0 0 0 Proceeds from the sale of property, plant & equipment, investment property and intangible assets.

(1,997) (4,469) (4,469)

Insurance Refund (81) (78) (78) Proceeds from short-term and long-term investments

(423,467) (485,166) (485,166)

Other receipts from investing activities (441) (592) (592)

Capital grant received (Government) (2,549) (2,087) (2,087)

Capital grant received (non-Government) (24) (101) (101)

Net cash flows from investing activities 11,591 20,519 20,519

Note 23 – Cash Flow Statement - Financing Activitie s

Financing Activities 2014/15 2015/16 2015/16

Group Group PCC £’000’s £’000’s £’000’s

Cash payments for the reduction of outstanding liabilities relating to finance leases and PFI contracts

1,588 805 805

Interest Paid 304 4 4

Net cash flows from financing activities 1,892 809 809

Note 24 - Amounts Reported for Resource Allocation Decisions (Group Accounts Only as PCC costs are not reported in this format) The analysis of income and expenditure by service on the face of the Comprehensive Income and Expenditure Statement is that specified by the Service Reporting Code of Practice. However, decisions about resource allocation are taken by the Kent Chief Officer Team on the basis of budget reports analysed across directorates, with the exception of the Police & Crime Commissioners budget which is managed entirely within the Office of the PCC. These reports are prepared on a different basis from the accounting policies used in the financial statements. In particular: • no charges are made in relation to capital expenditure (whereas depreciation, revaluation and impairment losses in excess of the balance on the Revaluation Reserve and amortisations are charged to services in the Comprehensive Income and Expenditure Statement). • the cost of retirement benefits is based on cash flows (payment of employer’s pensions contributions) rather than current service cost of benefits accrued in the year. • expenditure on some support services is budgeted for centrally and not charged to directorates.

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The following tables show expenditure for Kent Police for the financial years 2015/16 and 2014/15, analysed subjectively and grouped based on operational policing units or directorates. This information is reported to the Chief Officer team on a month by month basis and used to inform resource allocation and other strategic decisions. The Force is organised into three geographical areas, North, West and East Divisions which undertake Neighbourhood Policing functions whilst incident management functions is centralised. The Police and Crime Commissioner for Kent is the statutory body appointed to hold the Chief Constable to account, set its budget and ensure the views of communities in Kent determine the priorities for the policing service in the county. Although the Office of Police and Crime Commissioner for Kent represents less than one percent of the total expenditure of the Force including it with the segmental reports is felt to be useful and informative.

Specific Grant income is also included within this group. This can be seen within the Reimbursements, Grants and Contributions line of the following reports.

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Central Ops Chief's

Office DCC

Portfolio Divisions Joint SCD Joint

Support Services

(1) Support Services Local P&P Corporate

Charges PCC Force Total

£’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s

Police Officer Pay 39,085 1,829 1,079 95,875 12,077 9,462 0 3,754 200 84 163,445 Police Officer Overtime 4,343 5 2 1,170 117 34 0 6 3 0 5,680 PCSO Pay 0 0 0 0 0 0 0 0 0 0 0 Other Staff Costs 11,928 555 5,206 12,808 8,759 13,742 1,136 14,300 59 915 69,408 Other Staff Overtime 548 0 59 32 140 106 0 165 2 2 1,054 Temporary or Agency Staff 11 0 13 9 0 252 0 0 0 18 303 Police Officer Injury/Ill health/Death Pensions 0 0 0 0 0 0 0 0 5,898 0 5,898 Other Employee Expenses 0 0 0 3 1 160 0 0 287 0 451 Restructure, Training & Conference Costs 71 0 3 11 8 410 25 4 1,373 21 1,926 Premises Related Expenditure 166 3 6 12 35 10,374 8,353 10 1,067 45 20,071 Transport Related Expenditure 351 25 59 342 196 3,865 9 612 921 22 6,402 Supplies & Services 3,108 (24) 863 1,552 2,934 11,873 56 755 1,560 1,496 24,173 Third Party Payments 489 45 0 7 1,151 1,345 18 42 (581) 2,634 5,150 Capital financing and contributions 0 0 0 0 0 182 727 0 5 0 914 Transfers to Revenue and Capital Reserves (93) 100 0 0 409 (518) 0 (98) (325) 601 76 Reconciling item 0 0 0 0 0 0 0 0 1 0 1 Pension Fund Movement 0 0 0 0 0 0 0 0 208 0 208 Total Expenditure 60,007 2,538 7,290 111,821 25,827 51,287 10,324 19,550 10,678 5,838 305,160 Government Grants 0 0 0 0 0 0 0 0 0 0 0 Local Government Precept 0 0 0 0 0 0 0 0 0 0 0 Government & Overseas Funding (3,488) 0 (6) (650) (3) (489) 0 (58) (13,092) 0 (17,786) Sales, Fees, Charges & Rents (1,824) 0 (9) (22) (39) (931) (138) (351) (16) (2) (3,332) Special Police Services (25) 0 0 (1) 0 0 0 0 0 0 (26) Reimbursed Services - Inter Force (77) 0 0 0 (255) (539) 0 (77) (90) 0 (1,038) Reimbursed Services - Other Public Bodies (2,656) 0 (946) (240) (29) (89) (5,724) (220) (2) 0 (9,906) Reimbursed Services - Other (19) (1) 0 (172) (1,001) (886) (12) (2) (40) 0 (2,133) Interest / Investment Income 0 0 0 0 0 0 0 0 (592) 0 (592) Reimb Services - Income from other forces 0 0 0 0 0 (1,363) 0 0 0 0 (1,363) Local Gov. Specific / Partnership Funding (8) 0 0 0 0 0 0 (80) 0 0 (88) Total Income (8,097) (1) (961) (1,085) (1,327) (4,297) (5,874) (788) (13,832) (2) (36,264) Overall Position 51,910 2,537 6,329 110,736 24,500 46,990 4,450 18,762 (3,154) 5,836 268,896 Budget 52,518 1,811 6,526 121,759 26,867 45,810 5,150 19,523 (11,436) 5,836 274,364 (Over) / underspend for 2015/16 (608) 726 (197) (11 ,023) (2,367) 1,180 (700) (761) 8,282 0 (5,468)

(1) Support services include Finance and PFI the only two departments not collaborated with Essex.

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Reconciliation to Net Cost of Services £(000's) Total expenditure from reports to Chief Officers fo r the year 2015/16 268,896

Depreciation & Amortisation 6,981

Donated Assets (304)

Impairments of non-current assets (2,851)

Impairments of financial assets (805)

Interest Element of Finance Leases (104)

Interest Element on Finance Lease and PFI (4,161)

Short term compensated absences (64)

Transfers to Reserves (76)

Pensions adjustment – IAS 19 79,938

Investment Interest income 587

Police Officer Superannuation (40,882)

Police Staff Superannuation (7,159)

Net Cost of Policing Services 299,996

Gain/loss on disposal of non-current assets (595)

Interest Element of Finance Leases 104

Interest payable on PFI unitary payments 4,161

Expected return on pensions assets 109,813

Investment interest income (1,275)

Recognised capital grants & contributions (2,317)

Precept Income (87,744)

Non-service related Government Grants (187,172)

Home Office Pension Grant (37,128)

(Surplus) / deficit for the year 97,843

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Central Ops Chief's

Office DCC

Portfolio Divisions Joint SCD Joint

Support Services

Support Services Local P&P Corporate

Charges PCC Force Total

£’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s

Police Officer Pay 45,699 1,865 938 91,042 12,278 9,956 0 4,011 19 81 165,890 Police Officer Overtime 3,932 6 4 1,246 149 46 0 28 5 41 5,458 PCSO Pay 0 0 0 0 0 0 0 0 0 0 0 Other Staff Costs 13,104 729 5,262 12,756 9,903 14,470 1,017 13,940 141 857 72,179 Other Staff Overtime 317 1 53 53 136 140 2 369 68 11 1,150 Temporary or Agency Staff 0 0 0 0 0 0 0 0 0 0 0 Police Officer Injury/Ill health/Death Pensions 0 0 0 0 0 0 0 0 0 0 0 Other Employee Expenses 52 0 43 24 9 652 15 7 6,943 42 7,788 Restructure, Training & Conference Costs 0 0 0 0 0 0 0 0 0 0 0 Premises Related Expenditure 209 2 4 23 14 10,507 7,562 13 773 432 19,538 Transport Related Expenditure 422 33 64 355 228 4,661 9 622 953 30 7,376 Supplies & Services 4,153 64 285 1,595 3,510 10,163 82 468 (1,153) 1,342 20,508 Third Party Payments 317 63 4 10 923 1,742 69 14 1,326 2,482 6,949 Capital financing and contributions 0 0 0 0 0 182 1,285 0 3 0 1,469 Transfers to Revenue and Capital Reserves 287 0 0 16 (140) 2 0 (66) 8,209 (1,162) 7,147 Reconciling item 0 0 0 0 0 9 0 0 (126) 0 (117) Pension Fund Movement 0 0 0 0 0 0 0 0 343 0 343 Total Expenditure 68,491 2,763 6,656 107,121 27,012 52,529 10,040 19,407 17,503 4,156 315,679 Government Grants 0 0 0 0 0 0 0 0 0 0 0 Local Government Precept 0 0 0 0 0 0 0 0 0 0 0 Government & Overseas Funding (4,289) 0 (69) (703) (5) (537) (0) (13) (11,356) (754) (17,726) Sales, Fees, Charges & Rents (2,292) (2) (6) (48) (20) (266) (103) (305) (19) (2) (3,065) Special Police Services (156) 0 (0) 0 0 0 0 0 0 0 (156) Reimbursed Services - Inter Force (147) (177) (0) (0) (235) (1,683) (46) 35 (1,738) 0 (3,991) Reimbursed Services - Other Public Bodies (2,818) 0 (724) (58) (127) (250) (5,724) (89) 0 0 (9,791) Reimbursed Services - Other (8) (8) (1) (185) (588) (1,150) (36) (2) (315) (68) (2,361) Interest / Investment Income 0 0 0 0 0 0 0 0 (441) 0 (441) Reimb Services - Income from other forces 0 0 0 0 0 (1,968) 0 0 0 0 (1,968) Local Gov. Specific / Partnership Funding 0 0 0 0 0 0 0 (10) 0 0 (10) Total Income (9,709) (187) (800) (995) (976) (5,855) (5,910) (384) (13,869) (824) (39,509) Overall Position 58,782 2,576 5,856 106,127 26,036 46,675 4,130 19,022 3,634 3,332 276,170 Budget 64,534 1,929 5,955 109,638 27,592 47,801 4,839 19,746 (5,660) 3,538 279,913 (Over) / underspend for 2014/15 (5,752) 647 (99) (3 ,512) (1,556) (1,126) (709) (724) 9,294 (206) (3,743)

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Reconciliation to Net Cost of Services £(000's)

Total expenditure from reports to Chief Officers fo r the year 2014/15 276,170 Depreciation & Amortisation 6,693 Impairments of non-current assets (462) Impairments of financial assets 53,449 Interest Element of Finance Leases (104) Interest Element on Finance Lease and PFI (3,944) Short term compensated absences (216) Transfers to Reserves (7,187) Pensions adjustment – IAS 19 82,519 Investment Interest income 438 Capitalised value of ill health retirements (2,637) Police Officer Superannuation (26,443) Police Officer Injury Pensions (4,139) Police Staff Superannuation (6,774) Net Cost of Policing Services 367,363 Gain/loss on disposal of non-current assets 170 Interest Element of Finance Leases 104 Interest payable on PFI unitary payments 3,944 Expected return on pensions assets 121,066 Investment interest income (37) Recognised capital grants & contributions (2,572) Precept Income (84,323) Non-service related Government Grants (196,534) Home Office Pension Grant (32,558) (Surplus) / deficit for the year (Restated) 176,623

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Note 25 - Members’ Allowances Police Reform and Social Responsibility Act 2011 dissolved the Police authority in November 2011 therefore there were no members allowances. The Police and Crime Commissioner for Kent are paid a salary according to a nationally set pay scale and this is shown in the following note. Note 26 - Officers’ Remuneration In accordance with Regulation 4 of the Accounts and Audit Regulations 2009 the Authority has a specific requirement to disclose the number of employees whose taxable remuneration falls within certain brackets. Accordingly the number of employees whose remuneration, excluding pension contributions was £50,000 or more in bands of £5,000 was:

Remuneration Band (£)

Number of Employees

2014/15 2015/16

GROUP PCC GROUP PCC

50,000 – 54,999 164 0 186 0

55,000 – 59,999 115 1 121 0

60,000 – 64,999 34 0 27 0

65,000 – 69,999 12 0 14 1

70,000 – 74,999 4 0 10 0

75,000 – 79,999 10 1 6 0

80,000 – 84,999 11 0 6 1

85,000 – 89,999 3 0 6 1

90,000 – 94,999 3 1 1 0

95,000 – 99,999 2 0 1 0

100,000 – 104,999 0 0 1 0

105,000 – 109,999 0 0 1 0

110,000 – 114,999 1 0 0 0

115,000 – 119,999 0 0 2 0

125,000 – 129,999 1 0 0 0

135,000 – 139,999 0 0 1 0

140,000 – 144,999 1 0 0 0

145,000 – 149,999 0 0 1 0

150,000 – 154,999 1 0 0 0

195,000 - 199,000 1 0 0 0

200,000 - 204,999 0 0 1 0

The amended Regulations introduce a requirement to disclose individual remuneration details for senior employees whose salary is £50,000 or more per year. For these employees their salaries are listed individually by way of job title. Additionally persons whose salary is £150,000 or more per year must be identified by name.

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A senior employee is considered one whose salary is greater than £50,000 per year (calculated pro rata for part time employees) and who is responsible for the management of Kent Police to the extent that the person has power to control the major activities of the service, in particular activities involving the expenditure of money, whether solely or collectively with other persons. This includes the Police and Crime Commissioner, her Chief of Staff and Chief Finance Officer, all Association of Chief Police Officer (ACPO) ranking police officers, the Director of Essex and Kent Support Services, the Director of Human Resources and the Force Chief Finance Officer. These amounts have also been accounted for under the remuneration band table on the previous page.

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Post Title Note Salary including allowances

Perf’nce. Related

Pay

Expenses Allowances

Other Payments

(Police Staff)

Benefits in kind

Other Payments

(Police Officers

only)



Total remuneration

(including pension

contributions)

Group and PCC

The Kent Police and Crime Commissioner

85,000 0 0 0 0 0 85,000 9,860 94,860

Police and Crime Commissioner Chief of staff

1 17,199 0 0 0 0 0 17,199 1,805 19,004


2 76,252 0 0 0 0 0 76,252 3,520 79,772

Police and Crime Commissioner Chief Finance Officer

3 69,370 0 0 0 0 0 69,370 0 69,370

CC and Group


196,089 0 0 0 0 5,090 201,179 0 201,179

Deputy Chief Constable 147,936 0 0 0 0 0 147,936 0 147,936 Assistant Chief Constable (Serious Crime Directorate)

4 0 0 0 0 0 0 0 0 0


119,392 0 0 0 0 0 119,392 22,706 142,098


5 119,230 0 0 0 0 0 119,230 21,197 140,427


6 7,622 0 0 0 0 0 7,622 1,541 9,163


84,861 0 0 0 0 0 84,861 9,217 94,078

Director of Human Resources 7 30,879 0 0 0 0 0 30,879 3,582 34,461

Director of Corporate Services 7 85,829 0 0 0 0 0 85,829 9,956 95,785


145,225 0 0 0 0 0 145,225 16,846 162,071

Director of Corporate Communications

8 19,532 0 0 0 0 0 19,532 2,266 21,798

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Notes 1. Police and Crime Commissioner Chief of Staff left the OPCC on 2nd June 2015. 2. Started in the post of Police and Crime Commissioner Chief of Staff on 2nd June 2015, opted out of pension scheme on 30th September

2015. 3. Chief Finance Officer to the Police and Crime Commissioner is 0.8 FTE. 4. Assistant Chief Constable (Serious Crime Directorate) is employed by Essex Police and is in a 50:50 role. 1st Assistant Chief Constable

left the post on 30th October 2015, followed by the current Assistant Chief Constable starting the post from 30th October 2015. 5. Assistant Chief Constable (Local Policing & Partnership Directorate) retired on 1st March 2016. 6. Started in the post of Assistant Chief Constable (Local Policing & Partnership Directorate) on 29th February 2016. 7. Director of Human Resources transferred in the new post as Director of Corporate Services on 6th July 2015 following restructure of

Human Resources department. 8. Started in the post of Director of Corporate Communications on 1st February 2016.

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2014/15



Perf’nce. Related

Pay

Expenses Allowances

Other Payments

(Police Staff)

Benefits in kind

Other Payments

(Police Officers

only)



Total remuneration

(including pension

contributions)

Group and PCC

The Kent Police and Crime Commissioner

1 78,810 0 0 0 0 0 78,810 9,142 87,952


91,430 0 0 0 0 0 91,430 10,606 102,036

Police and Crime Commissioner Chief Finance Officer

57,943 0 0 0 0 0 57,943 0 57,943

CC and Group

Chief Constable, Mr Alan Pughsley 194,215 0 0 0 0 4,508 198,723 37,175 235,898

Deputy Chief Constable, Mr Paul Brandon

150,473 0 0 0 0 0 150,473 31,649 182,122


2 0 0 0 0 0 0 0 0 0

T/Assistant Chief Constable (Central Operations)

3 19,070 0 0 0 0 2,257 21,328 4,456 25,783


4 89,992 0 0 0 0 0 89,992 19,600 109,592


123,311 0 0 0 0 0 123,311 25,530 148,841


82,964 0 0 0 0 0 82,964 9,170 92,134

Director of Human Resources 115,550 0 0 0 0 0 115,550 13,404 128,954


143,786 0 0 0 0 0 143,786 16,679 160,465

Notes

1. The Police and Crime Commissioner for Kent's salary is set by the Home Office at £85,000. However, the PCC for Kent has chosen to make a contribution from her salary to part-fund the Youth Commissioner's salary costs.

2. Assistant Chief Constable (SCD) is employed by Essex Police but works across both Kent and Essex. 3. Temporary Assistant Chief Constable (Central Operations) retired from Kent Police on 10th June 2014. 4. Assistant Chief Constable (Central Operations) joined Kent Police on 26th May 2014.

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Note 27 - External Audit Costs In 2015/16 the following fees were incurred relating to external audit and inspection, carried out by our appointed external auditors, Ernst & Young.

2014/15 2015/16

£’000’s £’000’s

PCC Group PCC Group

Fees payable in respect to External Audit Fees 64 95 49 68

Fees payable to the Audit Commission in respect of other Services

1 1 0 0

Total 65 96 49 68

The Police and Crime Commissioner for Kent Single Entity incurred additional costs of £8,714 in 2014/15 (£10,552 for the Group) relating to additional audit work.

Note 28 - Grant Income

The Police and Crime Commissioner for Kent credited the following grants, contributions and donations to the Comprehensive Income and Expenditure Statement in 2015/16.

2014/15 2015/16

£’000’s £’000’s

Credited to Taxation and Non-specific Grant Income

· Non-service related Government Grant 183,236 173,874

· Council Tax Freeze Grant 13,298 13,298

Total non-service related grants 196,534 187,172

· Home Office Pension Grant 32,558 37,128

· Capital Grant & Contributions 2,572 2,317

Total 231,664 226,617

Credited to Net Cost of Services

· Counter Terrorism 11,349 11,146

· National Security Grants 37 34

· Designated Security Post Grant 294 294

· Competed Fund 150 0

· Ministry of Justice 604 1,951

· FIIP EU Grant 330 77

· Innovation Fund Grant 0 250

Total 12,764 13,752 All grants are analysed for outstanding conditions which would require any unspent amounts to be repaid. There are no repayments due as for 2015/16 as all grant conditions have been met.

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Note 29 - Related Parties The Police and Crime Commissioner for Kent is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the authority or to be controlled or influenced by Kent Police. Disclosure of these transactions allows readers to assess the extent to which the Police and Crime Commissioner for Kent might have been constrained in their ability to operate independently or might have secured the ability to limit another party’s ability to bargain freely with the Police and Crime Commissioner for Kent. Central Government Central government has effective control over the general operations of the Police and Crime Commissioner for Kent – it is responsible for providing the statutory framework within which the Police and Crime Commissioner for Kent operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the Police and Crime Commissioner for Kent has with other parties (e.g. council tax bills). Officers The Kent Police Chief Officer team led by the Chief Constable has direct control over all operational decisions and the day-to-day running of the service as well strategic decision making in conjunction with the Commissioner. All Chief Officers have been contacted and there are no related party transactions to disclose for 2015/16. The Police and Crime Commissioner, Chief of Staff, and Chief Finance Officer for the Police and Crime Commissioner for Kent were also contacted as they have influence over strategic decisions of Kent Police. There are no related party transactions to disclose for 2015/16. Other Public Bodies The Police and Crime Commissioner for Kent has a number of business relationships with public organisations such as local authorities in Kent and other Police Forces in England and Wales mainly Kent County Council, Essex Police and West Yorkshire Police for the National Police Air Service (NPAS). Kent County Council provides Treasury Management and Pensions services to Kent Police and also provides a range of supplies and services through their commercial services departments. These include provision of utilities such as gas and electricity as well as photocopier agreements and printing. The total paid to Kent County Council in 2015/16 was £14.85m – comprising £10.4m for pension contributions, £2.95m for gas and electricity, £1.2m for the provision of pension services, Treasury Management, contributions to partnership programmes for crime reduction and £0.3m for printing services and photocopying. Kent Police has two main collaborative agreements with Essex Police covering Serious Crime and Support Services. Each of these are categorised as jointly controlled operations as each Force uses and retains its own assets in the provision of the joint service rather than creating a legal entity separate to Kent Police and Essex Police. The amount paid to Essex Police for the year 2015/16 as contributions to joint heads of department and towards the Athena computer system was £7.0m. Jointly Controlled Operations are further explained in note 39. Kent Police paid £520,000 in 2015/16 (£512,000 2014/15) to the National Police Air Service for air support as part of a national framework.

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Note 30 - Capital Expenditure and Capital Financing The total amount of capital expenditure incurred in the year is shown in the table below together with the resources that have been used to finance it. Where capital expenditure is to be financed in future years by charges to revenue, as assets are used by the Police and Crime Commissioner for Kent, the expenditure results in an increase in the Capital Financing Requirement (CFR), a measure of the capital expenditure incurred historically by the Police and Crime Commissioner for Kent that has yet to be financed. The CFR is analysed in the second part of this note.

2014/15 2015/16

£’000’s £’000’s

Opening Capital Financing Requirement 46,228 44,866

Capital Investment

Property, Plant and Equipment 6,624 8,264

Investment Properties 0 0

Intangible Assets 463 1,884

Source of Finance

Capital Receipts (2,191) (4,200)

Government Grants and other contributions (2,572) (2,188)

Direct Revenue contributions (2,323) (3,759)

Repayment of PFI (1,285) (727)

Lease (78) (78)

Closing Capital Financing Requirement 44,866 44,062

Note 31 – Leases Police and Crime Commissioner for Kent as Lessee Finance Leases Kent Police has one building subject to a finance lease and that is the Transport Workshops at Quarry Wood, Aylesford. This contract was entered into in June 2000 for a period of 21 years. Historic costs for the building were £1.6m. The asset acquired under this lease is carried as Property, Plant and Equipment in the Balance Sheet at the following net amount:

2014/15 2015/16

£’000’s £’000’s

Property, Plant & Equipment 2,001 1,981

The Police and Crime Commissioner for Kent is committed to making annual repayments consisting of interest and repayment of capital, as the asset is classified as a Finance Lease only the interest of £103,983 per annum is charged to the Comprehensive Income and Expenditure Statement. As the Transport Department is a support service this cost is apportioned across the objective analysis categories according to the number of staff in each segment of service.

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The future minimum lease payments due under the contract in future years are:

2014/15 2015/16

£’000’s £’000’s

Not later than one year 182 182

Later than one year and not later than five years 727 727

Later than five years 182 0

Total 1,091 909

Operating Leases The Police and Crime Commissioner for Kent have contractual arrangements in place for the following: • Vehicles for Chief Inspectors and Superintendents. • a number of premises across the county where it has either been impossible or impracticable to purchase

operational property • photocopiers and multi-function devices (printing, photocopying, faxing and scanning)

These are classified as operating leases with the full lease amount being charged to the Net Cost of Services in the Comprehensive Income and Expenditure Statement as follows:

2014/15 2015/16

£’000’s s £’000’s

Vehicle leases 306 232

Premises 510 425

Photocopiers 285 292

Total 1,101 949 The future minimum lease payments due under the contracts in future years are:

2014/15 2015/16

£’000’s £’000’s

Premises

· Not later than one year 521 511

· Later than one year and not later than five years 1,191 931

· Later than five years 1,908 1,845

2014/15 2015/16

£’000’s £’000’s

Vehicles

· Not later than one year 216 117

· Later than one year and not later than five years 104 53

· Later than five years 0 0

The pattern for lease payments decreasing as time progresses in the above table does not allow for the renewal of leases or for taking on new agreements as existing ones come to an end. For example new vehicle leases will be entered into as new staffs become eligible or an existing contract expires.

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All values relating to leases on the Balance Sheet are at present value and not discounted due to the relative short term duration of the lease agreements and the materiality of the amounts involved. Police and Crime Commissioner for Kent as Lessor The Police and Crime Commissioner for Kent leases out property under operating leases for the following purposes: Housing – the Police and Crime Commissioner for Kent has a number of houses that it lets to individuals. These were returned to us by Kent County Council in 1995 complete with sitting tenants. The terms of each agreement is such that either party can terminate the agreement with a months’ notice. Telecoms masts – The Police and Crime Commissioner for Kent rents space on either buildings or its own masts to telecommunications providers such as mobile phone companies. These are long contracts but can be terminated at short notice by either party. There is a drive within the mobile telecommunications industry to collaborate / merge so it is possible or indeed likely that some of this revenue may be withdrawn in future as companies merge. Premises – There are currently three instances where Kent Police leases out part of its premises to partners such as the Crown Prosecution Service or highways Agency for a commercial rent. Such agreements are only undertaken where space is available, such an undertaking is mutually beneficial and would not compromise Kent Police’s impartiality or provision of service. The future minimum lease payments receivable under leasing agreements are cancellable by either party at short notice.

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Note 32 – Private Finance Initiative (PFI) funded s chemes Kent Police has two properties funded through PFI arrangements: North Kent Police station and Medway Police station, brought into service in May 2008 and December 2006 respectively. The Police and Crime Commissioner for Kent show these assets on its Balance Sheet and that they are depreciated and otherwise accounted for in line with other building assets in line with accounting regulations.

North Kent Medway Total

£’000’s £’000’s £’000’s Asset value recognized in the Balance Sheet. 32,365 21,053 53,418

Depreciation charges 2006/07 0 (234) (234)

2007/08 0 (702) (702)

2008/09 (989) (702) (1,691)

2009/10 (1,079) (702) (1,781)

Impairment following revaluation in 2010/11 (8,311) 0 (8,311) Revised Net Book Value following revaluation 21,986 18,713 40,699

Depreciation charges for 2010/11 (436) (702) (1,138)

Revaluation in 2011/12 0 1,509 1,509 Revised Net Book Value following revaluation 21,550 19,520 41,070

Depreciation charges for 2011/12 (436) (349) (785)


Revaluation in 2013/14 3,492 2,102 5,594

Total 24,170 20,924 45,094



Impairment following revaluation in 2014/15 (5,803) (8,396) (14,199)

Revised Net Book Value following revaluation 17,535 11,929 29,464 Depreciation charges for 2015/16 (331) (225) (556)

Custody Revaluation in 2015/16 3,424 1,358 4,782

Revised Net Book Value following revaluation 20,628 13,062 33,690

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North Kent Medway Total

£’000’s £’000’s £’000’s

Balance Sheet liability resulting from PFI arrangements on recognition 32,365 21,053 53,418

Capital Repayment

2006/07 0 (730) (730)

2007/08 0 (296) (296)

2008/09 (478) (323) (801)

2009/10 (564) (296) (860)

2010/11 (464) (341) (805)

2011/12 (558) (406) (964)

2012/13 (324) (442) (766)

2013/14 (428) (480) (908)

2014/15 (763) (759) (1,522)

2015/16 (350) (377) (727)

Net Balance Sheet liability resulting from PFI arrangements as at 31st March 2016 28,437 16,604 45,041

Note 9, Property, Plant & Equipment includes the asset values for both North Kent and Medway police stations along with depreciation charges and where these are included on the Police and Crime Commissioner for Kent’s Balance Sheet on page 19. The following tables show the value of the assets held under PFI schemes, the liabilities arising from these schemes along with depreciation charges for the assets. Although the payments made to the contractors are described as unitary payments, they have been calculated to compensate the contractors for the fair value of the services they provide over the life of the contracts, the capital expenditure incurred and interest payable whilst the capital expenditure remains to be reimbursed. The amounts due for the remainder of the contracts are shown in the table below.

Within one

year Within 2 to

5 years 6 to 10 years

11 to 15

years

16 to 20

years

21 to 25

years

25 to 30

years £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s

North Kent

Repayments of liability 834 2,314 5,153 6,815 12,300 1,021 0

Interest 2,624 9,803 10,663 8,160 4,174 94 0

Service Charges 1,920 8,171 11,417 12,917 14,615 988 0

Total 5,378 20,288 27,233 27,892 31,089 2,103 0

Medway

Repayments of liability 455 1,211 3,923 5,694 5,321 0 0

Interest 1,472 5,594 5,895 3,893 1,052 0 0

Service Charges 1,269 5,402 7,547 8,539 6,148 0 0

Total 3,196 12,207 17,365 18,126 12,521 0 0

Rights to receive specified assets at the end of th e concession period Both PFI contracts are for 30 years and neither Party has the right or ability to extend this. The Medway contract expires in July 2034 and North Kent in July 2036 at which time the contractors are contractually required to hand the facilities and all furniture, fixtures and fittings provided under the Contract, over to the ‘Authority’ in good condition.

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Renewal and termination options There are no options to renew the contracts. Termination is possible in accordance with the terms and conditions of the respective contract. Other rights and obligations The PFI contractors are contractually required to maintain the assets and deliver facilities management services in accordance with the contracts on a ‘full risk transfer’ basis to the contractors. Note 33 – Impairment losses and changes in estimati on basis None this year. Note 34 - Termination Benefits At 31st March 2016 the Police and Crime Commissioner for Kent is one year into a four year restructure affecting both Police Officers and Staff across the organisation. This follows Government announcements in the Budget of significant funding reductions to the Police Service over a four years period, ending in March 2020. In order to meet the challenge of a reduced budget the Police and Crime Commissioner and Chief Officer team agreed to embark on a rigorous review of all services. This review recommended a reduction in staff numbers over the four years whilst maintaining front-line services where possible. Despite the stated objective of managing these reductions through natural wastage as people voluntarily leave the organisation there has been redundancy amongst police staff. Kent Police terminated the contracts of some employees in 2015/16, incurring costs of £1.352m (£0.162m in 2014/15). These payments were made to staff made redundant mostly on a voluntary basis, as part of the Kent Police rationalisation of the service. Payments were made to staff in accordance with Kent Police policy L1280, available on the Kent Police website, https://www.kent.police.uk/policy/human-resources-policies/l1280-employment-security-and-redeployment/ and are calculated on a combination of age, length of service and pay scale of the employee at the time of their leaving the organisation. The following table shows the number of people leaving the organisation through redundancy in bands of £20,000.

Cost to Kent

Police

2014/15 2015/16

Number of people

Redundancy Cost

Pension Cost Total Number

of people

Redundancy Cost

Pension Cost Total

£’000’s £’000’s £’000’s £’000’s £’000’s £’000’s £’000’s

0 – 20 8 62 0 62 52 460 46 506

20 – 40 4 100 0 100 17 334 129 463

40 – 60 0 0 0 0 4 113 56 169

60 – 80 0 0 0 0 2 55 77 132

80 – 100 0 0 0 0 1 54 27 81

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Note 35 - Defined Benefit Pension Schemes (Group Accounts Only) Transactions Relating to Retirement Benefits

The Police and Crime Commissioner recognise the cost of retirement benefits in the Net Cost of Services when they are earned by employees, rather than when the benefits are eventually paid as pensions. The charge the Police and Crime Commissioner is required to make against the Council Tax however, is based on the cash payable in the year and therefore the real cost of retirement benefits is reversed out of the Comprehensive Income and Expenditure Statement. The following transactions have been made in the Police and Crime Commissioner’s accounts during the year.

Police Officer Pension Schemes


2014/15 2015/16

£’000’s £’000’s

Comprehensive Income & Expenditure Statement

Cost of Services:



Effect of settlements 0 0


Interest income on plan assets 0 0

Interest costs on defined benefit obligations 117,000 104,800

Impact of Asset Ceiling on net interest 0 0

Total post employment benefit charged to the (surpl us) / deficit on the Provision of Services 185,700 166,900

Other post employment benefit charged to the Compre hensive Income & Expenditure Statement:

Actuarial losses (gains) arising from change in demographic assumptions

0 (9,100)

Actuarial losses (gains) arising from change in financial assumptions 431,100 (337,500)

Other experience 4,700 (169,500)

Total post employment benefit charged to the Compre hensive Income & Expenditure Statement 621,500 (349,200)

Movement in Reserves Statement

Reversal of net charges made to the (surplus) / deficit on the Provision of Services for post employment benefits

(185,700) (166,900)


Actuarial Contributions to Fund 65,300 78,000

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Assets and Liabilities in Relation to Retirement Be nefits

The following table reconciles the present values of the liabilities of the police pension schemes:

Reconciliation of Present Value of the Scheme Liabi lities (Defined Benefit Obligation)


2014/15 2015/16

£’000’s £’000’s

Benefit obligation at start of year 2,717,900 3,274,100

Current Service Cost 68,400 61,700

Interest on Pension Liabilities 117,000 104,800

Actuarial losses/ (gains) 435,800 (516,100)


Past Service Gains 300 400

Benefits paid / (received) (80,400) (91,500)


Benefit obligation at end of year 3,274,100 2,846,900

Reconciliation of Movements in the Fair value of th e Scheme (Plan)


2014/15 2015/16

£’000’s £’000’s

Opening Fair Value of Assets 0 0

Expected return on assets 0 0

Actuarial gains (losses) on assets 0 0

Contributions by employer 65,300 78,000

Contributions by participants 15,400 14,900


Net benefits paid out (80,400) (91,500)

Closing Fair Value of Assets 0 0

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2014/15 2015/16

£’000’s £’000’s

Present value of Police Pension Scheme defined benefit obligation 3,274,100 2,846,900

Fair value of assets in the Police Pension Scheme 0 0

3,274,100 2,846,900 Net Liability arising from the defined benefit obligation 3,274,100 2,846,900

Basis for Estimating Assets and Liabilities (PPS) 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 Police Pension Schemes has been assessed by Hymans Robertson LLP, an independent firm of actuaries. The principal assumptions used in their calculations have been:

Mortality assumptions:


2014/15 2015/16

Longevity at 65 (60 for Police Officers) for curren t pensioners: Men 29.5 29.7

Women 31.7 31.6

Longevity at 65 (60 for Police Officers) for future pensioners:

Men 31.1 31.2

Women 33.2 33.2

Rate of inflation (RPI)

Not available

3.20%

Rate of increase in salaries 3.20%

Rate of increase on pensions 2.20%

Rate of discounting for scheme liabilities 3.50%

Take up of option to convert annual pension into retirement lump sum 90.00%

The Police Pension scheme has no assets to cover its liabilities. The liabilities show the underlying commitments that the Police and Crime Commissioner has in the long term to pay retirement benefits. The total liability of £2.847m (£3.274m – 2014/15) has a substantial impact on the net worth of the Police and Crime Commissioner as recorded in the Balance Sheet. Statutory arrangements for funding the deficit however, mean that the financial position of the Police and Crime Commissioner remains healthy. Police Pensions are charged to the Police Pension Fund Account and any shortfall between the value of pensions paid in the year and the receipts into the Account from the employer and employee contributions is funded from the General Fund. A top-up grant from the Government is then claimed to cover the deficit or, in the event of a surplus, repaid to the Government.

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2014/15 2015/16

£’000’s £’000’s Comprehensive Income & Expenditure Statement

Service Cost



(Gain) / Loss on curtailments & settlements 0 0


Interest costs 16,720 15,725

Expected return on assets in the scheme (12,654) (10,712)

Administration Expenses 210 217 Total post employment benefit charged to the (surpl us) / deficit on the Provision of Services 17,885 22,850

Other Post -employment Benefits charged to the Comp rehensive Income and Expenditure Statement

Return on plan assets (excluding amount included in net interest expense) 18,731 (7,290)

Actuarial (losses) gains arising from demographic assumptions 0 0

Actuarial (losses) gains arising from financial assumptions (64,851) 41,010

Experience (losses) gains (16) 29

Other 0 0 Total post employment benefit charged to the Compre hensive Income & Expenditure Statement (28,251) 56,599

Movement in Reserves Statement Reversal of net charges made to the (surplus) / deficit on the Provision of Services for post employment benefits

(17,885) (22,850)


Employers contribution payable to the scheme 7,251 7,169 The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed asset investments are based on gross redemption yields 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 £3.422m (£31.385m - 2014/15).

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2014/15 2015/16

£’000’s £’000’s

Present value of liabilities


Fair value of assets in the Local Government Pension Scheme 313,801 319,592

S/T (148,512) (130,632)

Other movements in the liability /(asset) 0 0

Net liability arising from defined benefit obligati on


Total (150,702) (132,634) Reconciliation of Present Value of the Scheme Liabi lities

The following tables reconcile the present value of liabilities and assets of the Local Government Pension Scheme attributable to the Police and Crime Commissioner:


2014/15 2015/16 £’000’s £’000’s

Balance bought forward 373,731 464,503


Interest cost 16,720 15,725


Remeasurement (Gains) and Losses

Actuarial Gains / Losses arising from changes in demographic assumptions

0 0

Actuarial Gains / Losses arising from changes in financial assumptions 64,851 (41,010)

Experience (Gains)/Losses on defined benefit obligation 16 (29)

Past service costs 0 619

Losses/(Gains) on curtailments 0 0

Liabilities assumed on entity combinations

Benefits paid / transfers paid (8,027) (8,141)

Liabilities extinguished on settlements

Unfunded pensions payments (168) (162)

Balance carried forward 464,503 452,226

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Local Government Pension Scheme Assets

The Local Government Pension Scheme’s assets consist of the following categories, by proportion of the total assets held:


£’000’s % £’000’s %

Equities 214,447 68 213,128 66

Gilts 3,282 1 2,831 1

Other Bonds 34,905 11 35,091 11

Property 38,980 12 46,425 15

Cash 8,581 3 8,229 3

Target Return Portfolio 13,606 4 13,888 4

Total 313,801 100 319,592 100

Reconciliation of the Movements in Fair Value of Sc heme Assets


2014/15 2015/16

£’000’s £’000’s

Opening fair value of the scheme assets 279,799 313,801

Interest Income 12,654 10,712

Remeasurement gain / (loss)

Expected return on assets 18,731 (7,290)

Other 0 0

The effect of changes in foreign exchange rates 0 0

Employer contributions 7,251 7,169

Contributions by employees into the scheme 3,771 3,720

Benefits paid (8,195) (8,303)

Other (210) (217)

Closing fair value of scheme assets 313,801 319,592

Basis for Estimating Assets and Liabilities (LGPS) 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 Pension Scheme (LGPS) liabilities have been assessed by Barnett Waddingham, an independent firm of actuaries. Estimates for the LGPS scheme are based on the latest full valuation of the scheme as at 31 March 2016.

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The principal assumptions used in their calculations have been:


2014/15 2015/16

£’000’s £’000’s

Mortality assumptions: Years Years

Longevity at 65 (60 for Police Officers) for curren t pensioners:

Men 22.8 22.9

Women 25.2 25.3

Longevity at 65 (60 for Police Officers) for future pensioners:

Men 25.1 25.2

Women 27.6 27.7

% %

Rate of inflation (RPI) 3.30% 3.40%

Rate of inflation (CPI) on which Pensions are based 2.50% 2.50%

Rate of increase in salaries 4.30% 4.30%

Rate of increase on pensions 2.50% 2.50%

Rate of discounting for scheme liabilities 3.40% 3.80%

Take up of option to convert annual pension into retirement lump sum 50.00% 50.00%

Local Government Pension Scheme The liabilities show the underlying commitments that the Police and Crime Commissioner has in the long term to pay retirement benefits. The total liability of £132.634m has a substantial impact on the net worth of the Police and Crime Commissioner as recorded in the Balance Sheet. Statutory arrangements for funding the deficit however, mean that the financial position of the Police and Crime Commissioner remains healthy. The deficit on the Local Government Scheme will be made good by increased contributions over the remaining working life of employees, as assessed by the scheme actuary. Note 36 - Contingent Liabilities The Chief Constable of Kent along with other Chief Constables and the Home Office, currently have various claims lodged against them with the Central London Employment Tribunal. The claims are in respect of alleged unlawful discrimination arising from the Transitional Provisions in the Police Pension Regulations 2015. The exact number of current claims is a moot point as any success would inevitably apply to all similarly affected officers who have filed a claim or not. The Tribunal is unlikely to consider the substance of the claims until 2017. Legal advice suggests that there is a strong defence against these claims. The quantum and who will bear the cost is also uncertain if the claims are partially or fully successful and therefore at this stage it is not practicable to estimate the financial impact. For these reasons, no provision has been made in the 2015/16 Accounting Statements. Note 37 - Contingent Assets There were no contingent assets at the balance sheet date.

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Note 38 - Nature and Extent of Risks Arising from F inancial Instruments The Police and Crime Commissioner for Kent’s activities expose it to a variety of financial risks: Credit risk – the possibility that other parties might fail to pay amounts due to the Police and Crime Commissioner for Kent. Liquidity risk – the possibility that the Police and Crime Commissioner for Kent might not have funds available to meet its commitments to make payments to its suppliers and creditors. Market risk – there are three types of market risk: price risk, foreign exchange risk, and interest rate risk. • Foreign exchange risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign

exchange rates. • Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market

interest rates. The Police and Crime Commissioner for Kent has fixed rate, fixed term investments so is not impacted by this risk for assets but could be for liabilities as follows:

• Price risk - the possibility that financial loss might arise for the Police and Crime Commissioner for Kent as a result of changes in such measures as interest rates.

Risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the resources available to fund services. This service is undertaken by Kent County Council Treasury Management Department on behalf of the Police and Crime Commissioner for Kent. The Police and Crime Commissioner for Kent does not generally allow credit for general debtors beyond 30 days, such that of the £5.7m of trade debtors (invoices raised) at 31st March 2016, £0.2m is past its due date for payment, and can be analysed by age as follows.

2014/15 2015/16

£000's £000's

Less than three months 282 183

Three to six months 0 29

Six months to one year 0 2

More than one year 54 29

Total 336 243 A total of £12,128 incorporating many of the older debts, has been included in the 2015/16 accounts as a provision for debt impairment effectively reducing the value of debtors on the Balance Sheet. Following the economic downturn and events in the financial markets, the requirement for Governments to guarantee support for their banks and the performance of rating agencies particularly concerning Icelandic Banks, the Treasury Management Strategy was revised in November 2008 and is continually reviewed by the Chief Finance Officer of the Police and Crime Commissioner and Audit Committee. Credit risk Credit risk arises from deposits with banks and financial institutions, as well as credit exposures to the Police and Crime Commissioner for Kent’s customers. Deposits are made with banks and financial institutions by the Treasury Management department of Kent County Council in accordance with their risk based investment strategy and on advice from ratings companies who specialise in analysing financial institutions for investment purposes.

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Liquidity risk Except for Private Finance Initiatives (see note 32) Kent Police is debt free and is predominately funded through grants and income from the precept to local authorities due to this there is no significant risk that it will not be able to meet its commitments under financial instruments. The PFI liability is also supported by a Home Office grant which further reduces the potential liquidity risk. The Police and Crime Commissioner for Kent has a comprehensive cash flow management system that seeks to ensure that cash is available as needed. If unexpected movements happen, Kent Police has sufficient reserves to cover any payment required. There is no significant risk that it will be unable to raise finance to meet its commitments under financial instruments. Instead the risk is that Kent Police would lose interest on its investments through the early repayment clauses. To cover short-term commitments, the Police and Crime Commissioner for Kent maintains an instant access account and on call deposit accounts in line with a detailed cash management plan, minimising the requirement to realise an investment before it reaches final maturity. All trade creditors and other payables are due to be paid by the Police and Crime Commissioner for Kent in less than one year. The repayments on the two Private Finance Initiatives (PFI) buildings are tabulated in note 32 of this statement. Market risk Foreign exchange risk All Euro bank account balances have been transferred into sterling therefore reducing any foreign exchange risk to nil. Although Kent Police holds only minimal foreign exchange floats. Interest rate risk The Police and Crime Commissioner for Kent is exposed to risk in terms of its exposure to interest rate movements on its borrowings (under the PFI contracts) and investments although changes in interest rates on Kent Police’s investments are not significant. Repayments against the PFI for the interest element of the charge will increase the amounts payable and have a corresponding increase in the amounts paid through the Comprehensive Income and Expenditure Statement. The PFI contracts held by the Police and Crime Commissioner for Kent are comprised of two elements, capital repayment which is fixed and the service charge and interest which is variable based on the retail price index (RPI). If this index were to increase by 1% the net effect would be an increase in cost to the Comprehensive Income and Expenditure Account of £0.46m. A 1% decrease in the value of RPI would see a corresponding decrease. Price risk The Police and Crime Commissioner for Kent do not invest in equity shares or other similar financial instruments and therefore has no exposure to losses arising from movements in the price of shares. Note 39 – Jointly Controlled Operations (Group Accounts Only) Jointly controlled operations are explained in Note 1 of the Accounting Policies on page 25. The following table illustrates the net expenditure relating to each of the five operations Kent Police is involved with in partnership with Essex Police.

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2014/15 2015/16

£’000’s £’000’s

The joint Serious Crime Directorate 26,180 24,746

The joint Procurement Unit 375 396

The joint Information Services Directorate 15,346 16,407

The joint Transport Services Department 7,033 6,237

The joint Human Resources Department 2,460 2,921

The joint Business Services Department 6,463 6,437

The joint Estate Department 2,490 2,283

Total 60,346 59,427 The above amounts do not necessarily illustrate the amounts spent on fully collaborated functions however, only the total expenditure on jointly managed departments. The Serious Crime Directorate

SCD is working across Kent and Essex to provide intelligence and support to target and tackle anyone involved in serious criminality in our neighbourhoods, from home grown criminal networks within our own communities, to criminals who travel into Kent and Essex to commit offences.

The Directorate is one of the largest in UK policing dedicated to tackling serious and organised crime, with over 1,000 officers and staff working together across both counties.

The Directorate includes the following departments:

• Major Crime; • Forensics; • Serious and Organised Crime; and • Intelligence.

The Support Services Directorate

The Support Services Directorate (SSD) provides specialist services to Kent Police and Essex Police and includes the following departments:

Procurement

Procurement Services aim to deliver world-class procurement to all our customers while ensuring that both forces obtain value for money. We make sure contracts are in place to deliver a range of services for both Kent Police and Essex Police, from uniforms to printing.

IT Services

IT Services provide the two organisations of Essex Police and Kent Police with a comprehensive range of technology services and functions, including day to day support of over 500 business applications that enable police officers and staff to carry out their operational roles, integration and development of new products, a joined up network and communications structure across both forces, data storage, and the supply of a variety of user devices, including desktops, laptops, and telecoms equipment.

Our priority is to provide a first class service to our customer base, enabling better policing decisions and flow of information to the public of Kent and Essex through efficient, effective IT solutions. We are continuously looking to evolve the services we deliver in a world of fast-changing technology refresh, whilst ensuring we provide value for money in supporting front-line policing.

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Transport Services Transport Services supports cost efficient policing in Kent and Essex through the provision of vehicles and services, delivered to high standards, ensuring the operational effectiveness and safety of officers, staff and the public. The Transport Management team costs are shared between Kent Police and Essex Police. Human Resources The joint HR structure provides efficiency of resources and resilience enabling greater harmonisation of systems and processes across all services provided. HR delivers a comprehensive, professional and business focussed service across both Kent and Essex. The department covers Diversity and HR Strategy; Resourcing; Learning and Development; Health Services and Performance Improvement. Business Services Business Services carry out a range of high volume transactions and provides first level advice from two Business Centres (at Northfleet in Kent and Great Dunmow in Essex). The department also manages local facilities and administration services delivery teams at both HQ’s and other operational bases across both forces. The department also supports users accessing self-services and administers processes across a wide range of support services functions for all officers and staff as well as for and on behalf of other Departments in the Support Services Directorate The Head of Business Services and three deputies, one each for HR, Finance and Facilities are jointly funded between Essex Police and Kent Police. Estate Services Estate Services provides an in-house professional property service to the organisations of Kent and Essex Police and also to the public who visit our buildings. Kent Police has a 120,000m2 property portfolio with some 80 operational properties ranging from offices, custody suites and workshops through to highly specialised training facilities and telecommunications masts. The Estates’ department are 50:50 shared costs between Kent Police and Essex Police.

Note 40 – Jointly Controlled Assets The Police and Crime Commissioner for Kent and the Police and Crime Commissioner for Essex have jointly purchased assets on a 50:50 ratio for the Serious Crime Directorate and Information Services Directorate in 2015/16. The Police and Crime Commissioner of Kent accounts for this purchase in accordance with IFRS 11 and IFRS 12. Jointly controlled assets involve the joint control, and often the joint ownership, of assets dedicated to the joint venture. Each partner may take a share of the output from the assets and each bears a share of the expenses incurred. IAS 31 requires that the partner should recognise in its financial statements its share of the joint assets, any liabilities that it has incurred directly and its share of any liabilities incurred jointly with the other partners, income from the sale or use of its share of the output of the joint venture, its share of expenses incurred by the joint venture and expenses incurred directly in respect of its interest in the joint venture. [IAS 31.21].

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The joint Serious Crime Directorate and Information Services Directorate have jointly purchased the following in 2015/16:

Jointly Controlled Assets - 50% contribution

Total value of the Joint

Asset as of 31 March 2016

% Contributed

£’000’s

IT Department

Network Infrastructure Upgrade 565 50%

Single Desktop Programme 14 50%

IT Service Management Tool 53 50%

Mobile Data Terminals 120 50%

Video Conferencing 133 50%

Visual Media Project 230 50%

Dyslexia Licence 23 50%

Siraview Licence 50 50%

Soceasi perpetual licence for Mobile Data 22 50%

Deskalerts Licence 32 50%

Website Kentico Licence 41 50%

Serious Crime Department

Laser for Forensics 18 50%

DNA Clean Room 90 50%

SCD - Superglue cabinet 14 50%

Covert Equipment 232 50%

Total 1,637

Note 41 - Date of Authorisation of the Statement of Accounts for Issue

The Statement of Accounts was authorised for issue on 12th August 2016 by Mr Sean Nolan, Chief Finance Officer to the Police and Crime Commissioner.

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Police Officer Pension Fund Account (Group Accounts Only) Introduction The Police Officer Pension Fund Account was established under the Police Pension fund Regulations 2007 (SI 2007 No 1932). It is administered on behalf of the Chief Constable by Kent County Council. The Fund receives income each year from: • Employer’s contributions from the Police and Crime Commissioner, based on a percentage of pay • Contributions from serving police officers • Other receipts Pensions to retired officers, lump sum payments and other benefits are paid from the Fund.

The Account is balanced to nil at the end of the year by a contribution from or to the General Fund. The Account is not backed by any investment assets and its outgoings are funded entirely from the receipts identified above. The Fund accounts solely for the benefits payable in the financial year, and does not account for benefits payable after the period end. The following table identifies the movements on the Police Officer Pension Fund Account for the year.

2014/15 2015/16

£’000’s £’000’s

Contributions receivable

Police and Crime Commissioner for Kent (27,215) (23,344)

Serving Police Officers (15,388) (14,947)

Capital equivalent payment for ill-health (2,637) (1,754)

Transfers In

Individual transfers in from other schemes (684) (590)

Total Receipts (45,924) (40,634)

Benefits payable

Pensions 59,634 62,406

Commutations and lump sum payments 17,808 16,549

Lump sum death benefits

Payments to and on account of leavers

Refund of contributions 0 17

Individual transfers out to other schemes 1,040 2,067 Benefits payable - backdated in respect of Milne v Gad Commutations and lump sum payments 7,326 Interest on commutations and lump sum payments 1,663

Total Payments 78,482 90,028

Sub-total for the year before transfer from Police and Crime Commissioner for Kent of amount equal to the deficit

32,558 49,393


(37,128)


(3,277)

Transfer of amount from the PCC of amount equal to the deficit - Milne v Gad

(8,989)

Transfer of amount from the Police and Crime Commissioner for Kent of amount equal to the deficit

(32,558) (49,393)

Net amount payable for the year 0 0

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The above statement does not include liabilities to pay pensions and other benefits after the Balance Sheet date. The liabilities for future retirement benefits are disclosed in Note 35 of these Accounts. The employer rate is 21.3% (with an additional 2.9% top up contribution payable by the PCC, directly to the Home Office). In May 2015, the Pensions Ombudsman (Ombudsman) published their Final Determination in the case of Milne v Government Actuaries Department (GAD). This case centred on whether GAD had a proactive responsibility to review the commutation factors used in the calculation of the lump sum payments made to pensioners when they opt to take an increased amount of their pension benefit in that form. The Ombudsman found in favour of the plaintiff, which meant that for all Police Pension Scheme 1987 cases where pension entitlements were drawn between 1 December 2001 and 1 December 2006 recalculation of lump sum payments should take place based upon revised commutation factors to be issued by GAD, including adjustment for interest. The 2015/16 financial statements include benefits payable totalling £7.326m in respect of this matter, with all of this cost fully refundable from the Home Office. Pension Fund Net Asset Statement

2014/15 2015/16

£’000’s £’000’s

Unpaid pension benefits 0 0

Amount owing from the general fund 0 0

Net Current Assets and Liabilities 0 0

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Glossary of Accounting Terms Accruals - The concept that income and expenditure are recognised as they are earned or incurred not as money is paid or received. Actuarial gains and losses - Actuarial gains and losses arise where actual events have not coincided with the actuarial assumptions made for the last valuation (known as experience gains and losses) or the actuarial assumptions have been changed. AGS - Annual governance statement Amortisation - The gradual elimination of a liability, such as a loan, in regular payments over a specified period of time Appropriations - Transfer of monies between the revenue account and the balance sheet. Budget - A statement of the PCC’s plans in financial terms. A budget is prepared and approved by the PCC before the start of each financial year and is used to monitor actual expenditure throughout the year. Capital Charge - A charge to the revenue account to reflect the cost of using fixed assets. Capital Expenditure - As defined in the Local Government and Housing Act 1989, but broadly expenditure on the acquisition of a fixed asset or expenditure which extends the life or value of an existing fixed asset. Capital Financing Requirement - The capital financing requirement (CFR) measures the Group’s underlying need to borrow or finance by other long-term liabilities for a capital purpose. Capital Receipts - Proceeds from the sale of capital assets. They may be used to finance new capital expenditure or repay existing loan debt. Receipts available to finance capital expenditure in future years are held in the usable capital receipts reserve. CARE Scheme – Career average revalued earnings (CARE) schemes are a type of defined pension benefit scheme that are offered by employers. The benefits at retirement are based on your earnings and length of membership of the scheme.

Carrying value - An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance sheet. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset. For a company, carrying value is a company's total assets minus intangible assets and liabilities such as debt. Also known as "book value". Cash equivalent - A financial deposit placed with either a bank, building society, other local Police and Crime Commissioner for Kent or the Bank of England for a term of no longer than three months. Central Ops – Stands for Central Operations, this includes: Central Investigation Command; Strategic Partnerships and Tactical Operations Command. Chief Officers – Include the Chief Officers and Directors in the senior management team. CIES - Comprehensive Income and Expenditure Statement CIPFA - Chartered Institute of Public Finance and Accountancy, the main professional body for accountants working in the public services Contingency - An event that may occur but that is not likely or intended Corporate and Democratic Core - All aspects of the PCC’s activities in the capacity of a democratic representative, including corporate, programme and service policy making and more general activities relating to governance and the representation of local interests. It also includes the costs of the infrastructure that allows services to be provided and the information that is required for public accountability. Corporate Changes – includes general charges such as pension charges, Federation costs, Insurance; banking and treasury etc.

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Creditors - Amounts owed by the group at the Balance Sheet date for goods received or work done. Criminal justice arrangements - Includes custody and prisoner handling, criminal justice, the criminal records bureau, Central Ticket Office for fixed penalty notices and property offices. Current service (pensions) cost - An estimate of the true economic cost of employing people in a financial year, earning years of service that will eventually entitle them to the receipt of a lump sum and pension when they retire. It measures the full liability estimated to have been generated in the year and is thus unaffected by whether any fund established to meet liabilities is in surplus or deficit. Curtailment & settlements - Curtailment arises as a result of the early payment of accrued pensions on retirement on the grounds of efficiency, redundancy or where the employer has allowed employees to retire on unreduced benefits before they would otherwise have been able to do so. DCC Portfolio – DCC stands for Deputy Chief Constable. The portfolio includes the following: Corporate Services; Corporate Communications; Professional Standards and Legal Services.

Dealing with the public - Includes public enquiry officers (front counters), central communications and contact management units. Debtors - Amounts due to the Group but unpaid at the Balance Sheet date. De minimus - An amount so small that it will not have a significant impact on the accounts Depreciation - A charge calculated either on a straight line or reducing balance basis, to reflect the diminishing value of an asset over its useful economic life. Direct Revenue Financing - The amount of capital expenditure to be financed by a contribution from the revenue account in a single year. Division - The Force is organised into three geographical areas, North, West and East Divisions. Expected return on assets - The expected return on assets is a measure of the return (income from dividends, interest etc, and gains on invested sums) on the investment assets held by the pension scheme for the year. It is not intended to reflect the actual realised rate by the scheme, but a longer-term measure, based on the value of assets at the start of the year (taking into account movements in assets during the year) and an expected return factor. Fair Value - Fair value is the value of an asset or liability in an arm’s length transaction between unrelated willing and knowledgeable parties. Fixed Assets - Tangible assets which yield benefits to the Group for periods of more than one year ICT - Information, Communications & Technology IFRS - International Financial Reporting Standards Impairment - This only relates to fixed assets, including cash investments. Impairment is caused either by a consumption of economic benefits or by a general fall in prices. Intangible Fixed Assets - Assets that do not have a physical substance, but provide a benefit over a period of time, e.g. computer software. Intelligence - Includes the Central intelligence unit command team and associated support overheads, intelligence gathering and analysis. Investigations - Includes the crime support command team and associated support overheads, major investigation teams, economic crime, serious & organised crime unit, public protection units, local investigations and prisoner processing.

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Investigative Support - Includes scenes of crime officers; forensic costs paid to external providers such as Cellmark and the Forensic Science Service; fingerprint / DNA bureau, photographics and all associated local command and support costs. Joint Support Services - The Joint Support Services Department includes: HR; Learning & Development; Information Services; Procurement; Transport, Business Services and Estate Department. Leasing - A method of financing expenditure over a period of time. There are two main types of lease: a) Finance lease - where the risks of ownership are transferred to the lessee and where the assets are recorded in

the Group’s balance sheet at a current valuation. b) Operating Lease - where the risks of ownership stay with the leasing company and the annual rental charges

are made via the Revenue Account. LGPS - Local Government Pension Scheme Liability - An obligation that legally binds an individual or company to settle a debt Local policing - Includes Neighbourhood Policing teams, incident response and management, specialist community liaison and local command teams and local support overheads. Minimum Revenue Provision (MRP) - The minimum amount of the Group’s outstanding debt which must be repaid by the revenue account in the year MIRS - Movement in reserves statement National Policing - Including Counter Terrorism and Special Branch duties Non Distributed Costs - Past Service Pension Costs (IAS19), redundancy costs and non-service specific impairments. Net Book Value - The amount at which fixed assets are included in the balance sheet, i.e. their historical cost or current value less the cumulative amounts provided for depreciation. Outturn - The actual level of spending and income in a particular year Past service (pension) costs - These are non-periodic costs – they arise from decisions taken in the current year, but whose financial effect is derived from years of service earned in earlier years. PCC - Police and Crime Commissioner PCSO - Police Community Support Officer. PFI - Private Finance Initiative Police Grant - Police grant is allocated by the Home Office using a highly complex needs based formula. PPE - Property, Plant and Equipment Provision - An amount set aside to provide for a liability which is likely to be incurred, although the amount and date of that liability are uncertain. PSE - Police Staff Employee, an employee of Kent Police who is not a Police Officer. Police Community Support Officers (PCSOs) are PSEs. Remuneration - All amounts paid to or receivable by a person. It includes taxable expenses and the estimated money value of any other benefits received by an employee other than in cash (e.g. benefits in kind). Reserves - An amount set aside for a specific purpose and carried forward to meet expenditure in future years. General reserves represent accumulated balances which may be used to support future spending. Revenue Expenditure - Spending on day to day running expenses of the PCC and Force.

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Road Policing - Includes traffic policing, vehicle recovery and casualty reduction partnerships RPI - Retail Price Index, a measure of inflation which includes housing costs. Specific Grants - Government grants to aid certain services, usually paid at a fixed proportion of spending actually incurred. Specialist operations - Includes the command team and support overheads, air support, underwater / search / marine support units, dogs sections, public order teams, ports policing units, firearms units and civil contingencies Usable Capital Receipts - Capital receipts available to finance capital expenditure in future years.

Item 12


Title: Year-end processes 2016/17

From: Chief Finance Officer to the Chief Constable

1. As stated in the previous report the annual accounts for the 2015/16 were signed off

with an unqualified audit opinion on 12th August 2016. Some 6 weeks prior to the

national deadline and considerably ahead of most other forces.

2. The statutory deadline for completion of the audit and publication of the Accounts

remains at 30th September for the 2016/17 Accounts but is then brought forward by

two months for the 2017/18 financial year.

3. Although the Kent Police finance department has made considerable progress

towards these timescales there remains some work to do to ensure the revised

statutory timescales can be met consistently. The CFO and Chief Accountant

(formerly the Financial Controller) are leading a review within the department to

ensure the excellent progress is continued. The following summarises the action we

plan to take:

a. A workshop is planned for 14th September for those staff directly involved in

the year-end process. This workshop will review each stage of the closure

process and identify proposed changes and improvements. To date these

include: Bringing forward the asset valuation date; reviewing the quality of

the pensions information provided to the actuaries and working with the

pension provider to ensure better, more timely information is provided.

Working papers were considerably improved over previous years but some

were below the standard we wanted and will be subject to refinement. The

workshop will cover other areas and a verbal update will be provided at the

meeting.

b. The CFO has invited senior audit staff from Ernst & Young to a meeting at

Headquarters to discuss the 2016/17 audit timetable and resources to ensure

the outline timescales of publishing the final, audited accounts can be

achieved by 31st July 2017.

4. The Finance Department is determined to continue the improvements it has made

with the Accounts and is very well placed to do so.

Item 13


Title: Report on Complaint Trends

From: Detective Superintendent McDermott

Introduction

1. The attached data report shows a very positive picture in relation to the current status of complaints. We can also report that overall live complaints are on a downward trend with the current focus and priority on working alongside the divisional/departmental commanders to reduce the number of old complaints files.

On-going work

2. Professional Standards are prioritising an education programme in relation to complaints and have completed a number of training inputs so far to Inspectors, Acting Inspectors, Sergeants and Acting Sergeants. This will be an on-going programme in conjunction with the trainers at the training college.

3. Focus continues in respect of quality of complaint investigations and local resolution and a number of measures have been put in place, which includes preparation for workshops to be held around the county, one to one training sessions and further guidance available on PSD pages with the addition of a question and answer page which can be accessed 24 hours a day. Whilst this is still in its infancy this is expected to expand over the next few months.

4. The total complaints recorded for the same reporting period 1st April to 31st August 2015 = 389, 1st April to 31st August 2016 = 252. This shows a reduction of 137 in the current year so far.

5. We can also report that Kent is one of the lowest in the country with recorded complaints per thousand officers.

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L:\Managing the Organisation\PCC Drive\PCC\1. CORPORATE & ADMINISTRATION\6. MEETINGS\2016\Audit Committee\3. 26 09 2016\Papers\Item 14\CIPFA SOLACE Audit Committee paper 4.doc

Report to the Joint Audit Committee Date: 26th September 2016 Title: CIPFA/SOLACE Framework From: Chief of Staff, Office of the Kent Police and Crime Commissioner, Kent Police CFO

Introduction

1. At the last meeting, the OPCC Chief Finance Officer presented a paper on the CIPFA-SOLACE framework for good governance. The framework had been updated for 16-17, and now has a specific version for policing. It emphasises a more holistic approach to good governance, putting it at the heart of the organisation.

2. The specific version for policing comprises detailed advice/schedules dealing with seven key principles and more importantly, the meaning behind each core principle. It also includes suggested data and other evidence which could be used to assess the effectiveness of the governance arrangements associated with each principle. The seven core principles are as follows:

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

• Ensuring openness and comprehensive stakeholder engagement • Defining outcomes in terms of sustainable economic, social and

environmental objectives • Determining the interventions necessary to optimise the achievement of

intended outcomes

• Developing the entity’s capacity, including the capabilities of its leadership and the individuals within it

• Managing risks and performance through robust internal control and strong public finance management

3. It was agreed at the Audit committee that both the Force and OPCC would bring a paper to the next meeting outlining their proposed plans for reviewing their organisation’s compliance with the framework. This full review would then be presented to the December meeting.

Proposed actions

4. Members were very clear that they expected the work to be outcome based, rather than a collection of aims and principles. This is in line with Chapter

Item 14


Two of the document, which sets out the expectations for organisations when conducting this review.

OPCC

5. The seven principles have been apportioned to the various members of the

SMT, so that each is ‘owned’. All areas have more than one owner, which reflects the cross-cutting nature of governance, but for ease of administration there will be one person to lead on each area.

6. A briefing note has been prepared, which asks each individual to keep in

mind the overarching points taken from the framework:

• The focus is on decision making- how are decisions made in your area of work?

• What learning has there been along the way about how to make better decisions?

Having then considered the relevant section of the framework, people will then be asked to document:

• Consider which of the elements you feel the organisation complies with, and how well;

• Provide evidence of these, and identify which ones have external assurances;

• Identify which elements we don’t comply with; why; and consider if we should; and if not, why not;

• Identify what can be done to improve compliance.

7. The response for the first principle around integrity will be drafted first and circulated with the briefing note for other members of staff. This both reflects the fact that it is viewed as one of the two underpinning principles, and will hopefully act as a guide. One to one and group meetings will be held to provide support and challenge as officers review the processes in their areas.

8. Working with partners, in terms of commissioning, grant giving and collaboration for improving services for victims and witnesses and reducing crime and anti-social behaviour is a significant and complex area of work for the OPCC. Given the breadth of this, we have decided that it is important that the entirety of the governance structure, covering the seven principles, is considered and reviewed. This will create almost a secondary, sub report to the main OPCC governance report, albeit the two reports will clearly cross over and reference each other.

9. It will be made clear that especially with two of the three senior people in the

Office being new, there are challenges and opportunities- there is less corporate knowledge, but equally more chance to review and make changes and improvements. In addition, the organisation itself, and the new mode of

Item 14


governance by PCCs, is only four years old. Therefore whilst the governance structure and Office processes are relatively robust, ways of working are still developing.

10. In terms of the end product, no decision has yet been taken on whether it

will be a narrative or whether action plans will be needed and so on; these decisions will be guided by the process.

Kent Police

11. The Force is already addressing a number of the seven core principles as

illustrated in the following paragraphs. Other principles can be evidenced through line management and supervision as well as the exercise of financial controls through budgeting, forecasting and day to day business.

12. The Force has worked hard to embed a culture of ethical behaviour through

presentations to all officers and staff on the College of Policing’s Code of Ethics. The force Chief Officer Strategic Meeting has excerpts of the Code reiterated at all meetings which further ensures these values are considered in all decisions. This ties in tightly with the first of the seven core principles and is further embedded through the Force Culture Board, chaired by the Chief Constable and at all Leadership events across all ranks and grades.

13. The Culture Board is an example of encouraging openness and engagement

as is the Force’s investment in ‘Ideadrop’, an intranet based ideas exchange for all staff across the organisation on which postings can be made anonymously if required and that these messages will be reviewed by the Chief Officer Team. Staff surveys are undertaken annually but also at a directorate level with the trends, comments and scores reviewed and actioned as appropriate.

14. Demand management is becoming deep-rooted within the organisation

across all levels with the Continuous Improvement Team of Corporate Services leading on this. This links directly to developing the entity’s capacity.

Conclusion

15. A full report for each organisation will be provided to the Committee. The officers from both, charged with producing the reviews, will remain in contact to ensure where there are linkages, these are accurately reflected.

Item 18

Audit Committee 2016 Work Planner

1 – Covers updates on, planning for, as well as production of final accounts.

2 – This would be dependent on the release date of the VfM profiles.

Last revised: 14.09.16

AGENDA ITEM/ISSUE INDICATIVE DATES 2016 2017

15

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1 J

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26

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17

STANDING ITEMS

1 Update on Significant Operational Matters * * * *

2 Internal Audit Update * * * *

3 External Audit Update * * * *

4 Audit Recommendations Tracker * * * *

5 In Year Financial Monitoring *

* *

6 HMIC Inspections * * * *

7 PCC Risk Register * * * *

8 CC Risk Register (Restricted Item)

* * * *

9 Self-Assessment of Committee’s effectiveness * * * *

NON-STANDING ITEMS

10 Police and Crime Plan *

11 Approval of Internal Audit Plans *

12 Agreement of External Audit fees and plan *

13 Final Accounts, Annual Governance Statement and Audit Results

Report (Note 1)

* * *1

14 Annual Internal Audit Report *

15 Annual Review and Terms of Reference *

16 Complaint Trends *

17 Value for Money Profiles (Note 2)

*2

ITEMS AS REQUIRED

18 Risk Register Deep Dive *

Documents

Agenda - kent-pcc.gov.uk · 13 Complaint Trends 1610 – 1630hrs 267 14 CIPFA SOLACE Framework Progress Update Laura Steward & Mark ... CSR for 2017 onwards would be reopened, but