AT A MEETING of the FINANCIAL AFFAIRS PANEL of the HAMPSHIRE POLICE AUTHORITY held at Westgate Chambers, Winchester on Tuesday 16 July, 2002
PRESENT:
Mr. M.J. Attenborough-Cox (Chairman); Mrs. R. Atkinson; Mrs. L. Cawsey JP; Councillor A. Collett; Councillor J. Fazackarley; Councillor S. Hayes; Councillor P. Heath.
Also present: Mr. M. Coombes (Director of Finance, Police HQ); Mr. E. Knudsen (Treasurer's Department); Mr. J. Pittam (Treasurer); Mr. P. Robertson (Clerk), Ms. C. Vagg and Mrs. M. Boyes (Clerk's Office).
196 APOLOGIES
There were no apologies received.
197 MINUTES
The Minutes of the meeting of the Panel held on 24 May, 2002 were confirmed as a correct record and signed by the Chairman.
Matters arising:
(a) Minute 185 - Progress Report on Devolution of Pay Budgets to Southampton and Portsmouth
The Director of Finance confirmed that the Panel would receive a progress report at the September meeting.
(b) Minute 189 - Insurance and Risk Management
The Director of Finance confirmed that a letter had been sent to PITO however he had received a response confirming that the underwriters regard aviation activity as a high area of risk.
(c) Minute 195 - Technical Service Unit Relocation
The Director of Finance advised the Panel that negotiations were at an advanced stage. All work was progressing including the planning application.
198 SINGLE TENDER AND EXCEPTIONS REPORT - QUARTER 2 (APRIL-JUNE, 2002)
The Panel considered a report of the Chief Constable (Item 3 in the Minute Book) on contracts awarded under single tender procedures (2.8.3) Standing Orders on Contracts and acceptance of tenders for the period April to June, 2002.
Members sought clarification on single tender reference STQ418 with regard to an extension of contract for the provision of financial consultancy services to allow the completion and implementation of ongoing financial IT systems projects.
The Director of Finance confirmed that the position would be reviewed in one years time and he was currently awaiting the results of the HMIC report on Finance and Resources.
RESOLVED:
That the report be noted.
199 ANNUAL AUDIT OPINION AND DRAFT ASSURANCE STATEMENT
The Panel considered a report of the Treasurer (Item 4 in the Minute Book) on the annual internal audit opinion and the assurance statement for 2001/02.
Members noted the new format of the report and the draft assurance statement attached although it was noted that it was not mandatory to do this until the 2002/03 final accounts.
The report concluded that the Police Authority has an effective framework of control in place which provides adequate assurance regarding the effective, efficient and economic achievement of its objectives. Audit testing had shown that, where improvements to controls were required, appropriate action had been agreed by management and that issues would be resolved in an appropriate manner.
RESOLVED:
That the conclusions of the annual audit opinion and draft assurance statement be accepted.
200 INTERNAL AUDIT PROGRESS REPORT
The Panel considered a report of the Treasurer (Item 5 in the Minute Book) on the progress of work by internal audit included in the 2002/03 audit plan. The Panel were advised that 20% of the overall work had already been undertaken this year and that all issues raised had received a satisfactory response from management. Members were further advised of the requirements next year to publish corporate governance arrangements.
Members sought clarification on whether this covered non financial processes and systems such as the automatic crime recording system (ACR) and were advised that it did and the Director of Finance advised that a report on this matter would be submitted to the next meeting of the Authority.
RESOLVED:
That the progress on the 2002/03 internal audit plan be noted.
201 OUTTURN REPORT FOR 2001/02
The Panel considered a report of the Chief Constable and Treasurer (Item 6 in the Minute Book) on the draft revenue account for 2001/02 which compared actual expenditure with the adjusted revised budget.
Members noted there were still some final accounting entries to be completed but that these were not expected to make a significant difference to the figures presented in the report. The accounts were subject to audit by the District Auditor and the formal statement would be presented to the Panel at its meeting in September.
The Treasurer introduced the report and advised Members of the overall net position as set out in paragraph 3. He indicated that, whilst the outcome was close to the projected figures, it did create a difficult position for next year, and that budget priority would need to be given to rebuilding resources, especially for pensions.
The Director of Finance advised Members that the variations were set out in Appendix 2 to the report and he made specific reference to notes 1 and 6 relating to the overspends on employees and supplies and services. Some of the overspends on these two items were covered by income, but more work was required on variations in support staff pay, and in projecting forward increased costs for forensics and other supplies and services costs which were relatively expensive. This would require best value judgements on improved effectiveness and efficiency in detecting and solving crime. The Director of Finance undertook to write to Members with regard to the breakdown of the overspend described as "other costs £196,000" in Note 6, Supplies and Services.
RESOLVED:
(a) That the position of the revenue and capital outturn for 2001/02 be noted.
(b) That it be a RECOMMENDATION to the Authority that the additional cost of police pension commutations (£489,000) be met from the pensions reserve with the balance of the overspend (£326,000) being met from the general reserve.
(c) That any adjustments to the current year's revenue budget to accommodate the net underspend on devolved budgets in 2001/02 be reported to the Panel as part of the half year's budget monitoring report.
202 POLICE AUTHORITY'S BUDGET - OUTTURN REPORT FOR 2001/02
The Panel considered a report of the Treasurer (Item 7 in the Minute Book) setting out the financial performance of the budget for servicing in the Police Authority for the year to 31 March, 2002.
The Treasurer introduced the report and advised Members that the increase in costs for supplies and services was mainly due to increases in activity by the Police Authority.
RESOLVED:
That the position on the outturn for the budget for servicing the Police Authority 2001/02 be noted.
203 TREASURY MANAGEMENT
The Panel considered a report of the Treasurer (Item 8 in the Minute Book) on the exercise of the treasury function.
RESOLVED:
(a) That the exercise of treasury management in 2001/02 be approved.
(b) That the approved list of borrowers be amended to include the institutional sterling money - market funds managed by Standard Life Investments and J.P. Morgan Fleming.
204 NEW FINANCIAL SYSTEMS - PROGRESS REPORT
The Panel considered a report of the Chief Constable (Item 9 in the Minute Book) on the latest position on the implementation of both the cfacs general ledger system and the Resourcelink payroll system.
RESOLVED:
That the position of both financial systems be noted and that future reports to the Panel be limited to the post Implementation Review unless a significant matter requires a report.
205 REVENUE AND CAPITAL BUDGETS 2002/03 - FIRST QUARTER MONITORING REPORT
The Panel considered a report of the Chief Constable and Treasurer (Item 10 in the Minute Book) on the revenue and capital budgets for the first quarter of the current financial year.
The Director of Finance advised the Panel that the overspend in 2001/02 put pressure on this year's budget as the underspends in the devolved pilot divisions had to be honoured. He further advised that the Force had yet to receive any detailed guidance from the Home Office regarding the Home Secretary's £20m challenge fund for the Force estate and that further information was awaited from the Home Office with regard to funding for youth justice facilities although the Chief Constable had written twice to the Home Office on this issue.
A report on the medium term projection of the revenue budget would be brought to the September meeting of the Panel and would provide an update on the current year's budget as well as projections for future years.
RESOLVED:
That the first quarter position on the revenue and capital budgets be noted.
206 URGENT BUSINESS - LOCAL GOVERNMENT FINANCE : FORMULA GRANT DISTRIBUTION
The Chairman was of the opinion that the above item should be considered at the meeting as a matter of urgency by reason of the following special circumstances, namely, that the matter would have significant implications for the Authority's 2003/04 budget and beyond.
The Treasurer circulated a letter that had been sent to the Chairman of the Authority on new proposals for formula grant. Members discussed the issues set out in the letter, in particular the significant potential losses in Government grant from proposed changes on resource equalisation and the area cost adjustment, which recognises the higher costs of policing in the south-east. It was agreed that a formal response be sent to the Government in September following the consideration of a report on this matter at meetings of the Financial Affairs Panel and the full Authority. The Treasurer also advised the Panel about the proposed cash increases in police spending announced on 15 July in the Spending Review 2002.
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