Revenue Set Aside (Voluntary Addition) (1,326)Estimated operational Boundary at 31.03.2009 11,123The authorised limit is calculated as: 0.05*11,123 = 11,679.15Proportion of Authorised Limit used = Operational Boundary/Authorised Limit=11.123/11.7=0.95As a result, safety margin = 100% - 95% =5% The recommended margin is 5 per cent of the operational boundary to allow adjustments in the authority’s expenditures due to the dynamic operating environment. Therefore, Mid & West Wales Fire Authority operates within the recommended safety margins. 2.0 Operational Boundary and MWW Fire2.1 Setting the Operational BoundaryThe operational boundary provides an estimate of the financial requirements to necessitate the authority’s operations over a specified period of time.
In most instances, funding for public institutions go hand in hand with the nation’s budgetary periods. In calculating the operational boundary, the management seeks to establish the high and low financial requirements that can be able to absorb the financial fluctuations that are incurred in the authority’s daily operations (The Operational Boundary, p2). In setting the operational boundary, the authority’s outstanding balances and financial obligations are considered in order to identify its financial position. 2.2 Main Considerations of Mid & West Wales Fire and Rescue AuthorityOne of the main considerations of the FRS is its incomes and expenditures that enable the authority to manage its daily operations.
Majority of the FRS revenues are acquired from contributions made by unitary authorities that are complemented by fees, charges and revenue grants. On the other hand, the FRS spends majority of its revenues on salaries and wages, operations and capital financing. The second consideration is the funds available to fund the FRS’s operations. Budgets seek to strike a balance between the authority’s revenues and expenditures that have a surplus or deficit impact on the available funding.
Thirdly, capital borrowing and expenditures are aimed at establishing capital projects for social welfare. For the FRS, funding for capital projects can only be sourced from the Public Works Loan Board. Lastly, reserves and balances are vital in ensuring the operations of the FRS as well as compliance with the local and regional authorities (Mid & West Wales Accounts 2008/09, p7). During the operational year, the authority’s utilisation of the available funds may either exceed or fall below the budget estimates.
As a result of this, the authority maintains a general reserve account that smoothes these budgetary discrepancies. The Mid & West Wales Fire and Rescue Authority has recognised and accommodated the above considerations in its financial statements in an effort to establish its fair financial position. Basically, the four considerations seek to identify the sources of revenue available to the FRS and its expenditures. Revenues are recorded when services are offered and expenditures charged when the works are complete. Therefore, the management exercises complete control over the authority’s cash flows to ensure payments and receipts are received duly.
3.0 Financial Risks3.1 Characteristics of Mid & West Wales Fire and Rescue AuthorityM& WW Wales Fire Service is the largest operational rescue services in the UK serving an area with an estimated 4,500 square miles. The authority serves a mixture of urban and local populations with a workforce totalling to 1,400 staff personnel. Additionally, the authority has a total of 57 stations across the 6 command centres that are pegged on the unitary authorities (FireFightingNews 2010, Para 1). Compared to the GMFRS, the authority covers a much larger area and thus requires additional staff to efficiently execute its duties.
However, the population served by the Mid & West Wales Fire and Rescue Authority is lesser than that served by the GMFRS and hence the evident provision of efficient services. Secondly, the GMFRS has three command centres that are established on regional basis. Lastly, the GMFRS has a high number of staff estimated at over 2,500 spread across the 41 fire stations (Oneplace 2009).