1 Introduction

1.1 This foreword gives:

· a summary of the various statements which make up the 2006/07 accounts

· a broad picture of where the money comes from and what it is spent on

· a summary of the revenue expenditure on services and capital expenditure on new assets over the course of the year.

2 Summary of Statement of Accounts

2.1 The accounts for 2006/07 are set out on pages 5 to 8 and 17 to 55. They consist of the following:

· Statement of accounting policies - sets out the policies adopted by the Authority in preparing the Accounts. They are largely determined by the Code of Practice.

· Statement of internal control - reviews the effectiveness of the system of internal control.

· Statement of responsibilities for the statement of accounts - records the respective responsibilities of the Authority, Treasurer and Chairman of the Finance and General Purposes Committee.

· Income and Expenditure Account - reports the net cost for the year of all the functions for which the Authority is responsible and how they have been financed.

· Statement of Movement on General Fund Balance - discloses the adjustments necessary to determine the movement on the General Fund Balance for council tax setting purposes.

· Statement of Total Recognised Gains and Losses - brings together all the gains and losses that reflect the Authority's net worth.

· Balance Sheet - this sets out the financial position on 31 March 2007.

· Cash flow statement - this summarises cash coming in or going out from transactions with others for revenue and capital purposes.

· Pension Fund Accounts - reflects the payments made to pensioners and those retiring, transfers between pension funds by employees joining and leaving the Authority and employer contributions. These costs are met by a specific Government grant.

2.2 In addition a Statement of Internal Control, which reviews the effectiveness of the system of internal control, is included on pages 9 to 16.

3 Where the money comes from

3.1 The Authority's income comes from general Government grants, a share of national business rates and the council tax. In addition specific Government grants are received for certain services and fees are charged to customers for some services. Interest is also earned on day to day balances.

3.2 The proportion of the Authority's income from these sources is as follows:

3.3 The `switch' of funding between national business rates and general Government grants reflects the new basis for allocating national business rates.

4 What the money is spent on

4.1 The Authority spent its money as follows:

4.2 The sharp increase in the percentage of expenditure attributable to firefighters pay and the sharp drop in expenditure on pensions is the result of the change in financing of firefighters pensions - the Authority now pays an employer's pension contribution and does not finance the cost of past employee pension costs.

5 Overview of the year - revenue account

5.1 There was a significant change to the financing of firefighter's pensions in 2006/07. Therefore to enable a like-for-like comparison the Government issued an "Alternative Notional Amount" (ANA) which notionally adjusts the 2005/06 budget requirement to take this change into account. The 2005/06 ANA was £57,878,000. The Authority set its budget requirement at £59,560,000 which was therefore 2.9% more than this adjusted original budget for 2005/06.

5.2 The main components of the 2006/07 budget (which has been re-cast to reflect the new accounting requirements - further explanation can be found in the notes to the core financial statements) and actual income and expenditure are set out below:

6 Overview of the year - capital expenditure

6.1 In 2006/07 the Authority spent £6,353,000 on capital projects:

7 Debt

7.1 The Authority currently has fourteen loans totalling £5.45m.

7.2 On a day to day basis the Authority is able to lend to and borrow from Hampshire County Council.

8 Changes

8.1 There were no major changes to the Authority's responsibilities in 2006/07.

9 Further information

9.1 Further information can be obtained about the accounts from the Treasurer to the Fire and Rescue Authority at the County Treasurer's Department, Hampshire County Council, The Castle, Winchester, Hampshire, SO23 8UB, telephone (01962) 847518, or e-mail [email protected].