The Domain of Financial Management: Shropshire Fire and Rescue Service - Report Example

Running head: SHROPSHIRE FIRE AND RESCUE SERVICE Shropshire Fire and Rescue Service Name Institution Instructor Class Date TABLE OF CONTENTS 1. Introduction 3 2. Setting an authorized limit and an operational boundary 4 3. Considerations accommodated by Shropshire Fire and Rescue service 4 4. Marginal safety of Shropshire fire and rescue service 5 5. Characteristics of Shropshire fire and rescue service 6 6. Six categories of risk facing the Shropshire fire rescue service 7-10 6.1 Business 7 6.2 financial 8 6.3 Physical 8 6.4 economic 9 6.5 political 9 6.6 Product life cycle 10 7. Conclusion 10-11 8. References 12 Appendix-A Shropshire Fire and Rescue Service 1. Introduction The domain of financial management is very important for every public facility providing organization. The financial management personnel endeavour to maintain a track of financial dealings to keep a record of the resource allocation and their changes in future. Also such information is important to educate and inform the public about different activities and their financial implications. The Fire and Rescue services, owing to its sensitivity of human life and safety should particularly plan the allocation of available resources in such manner that the public trust and safety can be guarded. Being appointed as a financial manager of Shropshire Fire and Rescue Authority, various aspects of fiscal management need to be analysed to be able to assist the senior financial manager to develop a financial report. The task requires an extensive analysis of the budgetary arrangements laid down by the authority to monitor its finances. In case of external debt, the commonly applied budgetary controls are Authorized Limit and Operational Boundary. Hence the report will initially define and elaborate these indicators and the authority’s initiatives to see whether or not it is able to meet various possible eventualities that may take place in its capital management activities. For this purpose marginal safety will also be calculated. While undertaking a financial assessment, it also becomes important to specify the particular characteristics that are peculiar to the Shropshire fire and rescue authority. The assessment of these ground realities can help in justifying the various initiatives taken by the authority to a number of stakeholders. The various risks, faced by the Shropshire fire and rescue service will also be identified to assess their financial implications. This assessment will help us understand the performance of the authority in mitigating these risks and their financial implications. 2. Setting an authorized limit and an operational boundary: Both Authorized Limit and an Operational Boundary are the limits applied to the specific considerations of external debt. These are set out in consistence with an authority's plans for capital disbursements and finance policy statement and practices. These financial benchmarks lend the financial managers the authority, to undertake detailed monitoring of available resources. The operational boundary is the approximation of the expected sum of different borrowing needs and activities from outside the authority. The operational boundary needs to establish a direct connection with the monetary costs of the authority's plans, the approximate values of the capital financing obligations as well as the estimated cash flow supplies for different purposes, including revenue. On the other hand, the Authorized Limit is calculated and set out to provide headroom for unusual cash-flow movements and other loan requirements, besides the operational boundary. Thus it is strongly suggested that the authorised Limit should permit for a 5% deviation (rounded approximately to £0.5 million) on the operational boundary to permit the allowance of necessary headroom. 3. Considerations accommodated by Shropshire Fire and Rescue service The Shropshire Fire and Rescue Authority, in England has a long history of working and taking serious efforts to ensure the safety of lives and properties of the both the rural as well as the urban population (Shropshire fire and rescue service, Safer communities core strategy, 2006-2009). However, besides being ambitious the authority also seeks to control and make efficient use of available resources. Thus, the department of Resource and Financial Management at Shropshire undertake necessary actions to ensure that the level of external debt is not breached throughout the year, by taking into account the Operational Boundary and authorised limit. The Shropshire Fire and Rescue Service has established a precise and well-maintained authorized limit and operational boundary concerns. It establishes a monitoring report to measures the quantity of authorised limit and operational boundary, four times a year, this is aimed to keep an effective record about the services supporting the achievement of its planned aims and strategies (Safer communities’ core strategy, 2006-2009).. This practice has greatly helped to reduce the temporary borrowing activity so far. There has been no need for temporary borrowing since the year 2004. The allocation of resources in different activities has always been a calculated and well thought-out decision complying with the financial reports and reviews. The Fire and Rescue Service responds to incidents other then fires, such as road traffic collisions, terrorists’ bustle, challenges posed by climate change, etc by prioritising the activities on the basis on risk assessment. This prioritisation is aimed to ensure a balance of resources and effort proportionate to the risk profile. 4. Marginal safety of Shropshire Fire and Rescue Service For the year –2008/09 For Shropshire Fire and Rescue Service, Operational Boundary = £5.810m For Shropshire Fire Rescue Service, Authorised limit = £6.140m Hence calculating the safety margin which is a ratio of operational boundary and authorized limit, 6,356,000/9,217,000= 0.689 £5.810m / £6.140m=0.946 So proportion of authorised limit used = operational boundary/authorised limit = 0.946 Calculating the safety margin, 100% - 94.6%= 5.4% The recommended safety margin is 5% to 8%. Since the safety margin in case of Shropshire Fire and Rescue service is 5.4%, it evidently shows that the Shropshire Fire and Rescue Service operates within recommended safety margins. Hence accessing the progress of Shropshire and Wrekin Fire Authority, through the evaluation of its existing policy and its due implementation makes the controlled financial structure quite evident. The driving policy of the department is to work extensively to carry on its vision and ambitions. This effort from part of Shropshire Fire and Rescue Authority has succeeded to demonstrate everlasting benefits to the served communities. They have managed to utilize the available resources in a skilled manner to avoid any wastage of the allocated budget. The safety margin for GMFRS is ........ Therefore Shropshire F & RS operate closer to the recommended limit. This means that the risk they are exposed to borrowing that they cannot afford to repay is less than GMFRS. This also means that the authority is making good use of its resources. i.e. it does not have money that is not being put to the use of the authority that may be of benefit to other areas of public finance, such as healthcare. 5. Characteristics of Shropshire fire and rescue service The area covered by the Shropshire Fire and rescue Service is very large and consequently the population to be looked after is also huge. A large portion of the total area is covered by agricultural lands. Hence the rural population counts for 45% while the remaining 55% is urban. Agriculture lands, being the major occupation and most widely occurring land use typology, in the county poses particular risks. A large part of the county is under the high risk from flooding. Various rural areas are under special threat from fires during dry spells. Increasing Community Fire Safety (CFS) activity in the more rural areas of Shropshire resulted in higher spending on the use of Fire Service Emergency Cover (FSEC) software. As compared to Greater Manchester Fire and Rescue service, where major land use typology is commercial and metropolitan, the Shropshire has more balance division, and this directly impacts the provision of services. The process of Risk Management Planning (IRMP) adopted by the Shropshire fire and rescue service identified the existence of around 20% of the residential areas are in highly risked localities, of which 40% area belong to rural parts of the county, which are more difficult to access in case of fire. In order to seek fastest possible fire responding facilities, for Shrewsbury, the service consulted the relevant stakeholders during the year 2008-09, regarding the division of reserves of station to locations north and south of Shrewsbury. This review was analyzed in partnership with Shropshire Ambulance Service. The review was assisted with the IRMP risk assessment tools, and concluded that there is no need of splitting the Shrewsbury’s fire engines in two locations. 6. Six categories of risk facing the Shropshire fire rescue service Recognising areas of changing demand and looking at areas of efficiency Assessing risks and their financial implications; 6.1 Business: Risks of being isolated from the main stream businesses of the county have become prevalent in case of every public safety organization. Such risks are mitigated by building partnership ties with business partners and hence sustaining the growth of the Shropshire fire and Rescue Service. Efforts have been made to build lasting and practical links with partners belonging to different areas such as Local Safety forums, Police Consultative Groups, Parish and Local Councils and local charity / voluntary groups local youth groups, Crime and Disorder Partnerships, and English Heritage. Evaluation of existing Aerial Appliance in Shropshire was carried out during the year 2005-06. The review of aerial appliance identified that two permanently staffed Aerial Appliances in Shropshire represented an overprovision. During the year, 2007-2008, a detailed review, and full consultation with different stakeholders, was carried out regarding the shifting of fire engine previously stationed at Telford, to its south, the fire station at Tweedale (Integrated Risk Management Plan, 2007/08). The review revealed that the proposal can surely be applied to improve the fire fighting facilities to both the Telford as well as its neighbouring communities. Hence the Service took the accompanied action and reduced the time required to handle incidents in Telford area and hence increasing the efficiency of the service. GMFRS has different needs and so the utilisation of appliances and availability of appliances is managed in a way to accommodate the specific requirements of the area in which it operates. 6.2 Financial: The financial risks have been very smartly faced by the Shropshire Fire and Rescue service. As a result we see a constant management and compliance of financial strategies and reduction in the needs for relying on other monetary sources. Hence the organization establishes the financial statements for limiting the borrowing of loans and aids and hence making an intelligent use of public revenue. The report prepared by audit Commission in the year 2008, has admired the Authority in a number of areas including reducing fire risk at homes and workplaces, their contribution to a Crime Disorder Reduction Partnership (CDRP) safer motorcycling campaign which reduced collisions and brought motorbike related road deaths down from ten in 2006/07 to zero in 2007/08: “Shropshire Fire and Rescue Service is reducing fire risk for businesses and residents. In 2008 fires in non-domestic properties reduced at a faster rate than in other areas” “Members of Shropshire Fire and Rescue Authority are key contacts in the community and strong ambassadors for the fire service” (Safer communities’ core strategy, 2006-2009). 6.3 Physical: Unforeseen natural calamities and hazards other then fire, like terrorist activities, road accidents, pose serious uncertainties to the authority. With no budget allocated funding from government for preventing RTC (Road Traffic Collision), the service used current revenue reserves for RTC. Hence continuing to improve RTC training facilities on retained and whole time charged £5000 per year during the years 2004-2009 to the facilities manager,. The Shropshire Fire and Rescue Service is particularly concerned about maintaining a regular and effective contact with specifically vulnerable groups like minority groups, handicapped people, senior citizens, young people or other socially underprivileged groups. In this regard, a lot of planning efforts for efficient communication has been made with media as a helpful and close associate. Owing to the continuous struggle to achieve excellence, the service is registered with the British Standards Institution (BSi) and certified by them to the BS EN ISO 9001:2000 Quality management Standard (Appendix-A). BSi is the single UK body, accepted by Government to grant registration and certification to well-performed organizations. Shropshire is largely rural compared to GMFRS which is largely in an urban area. The risks of road traffic accidents and congestion are less in Shropshire (Community safety road safety strategy 2006 to 2009). 6.4 Economic The threat of fraud resulting from the prevailing economic recession is carefully assessed by the Audit Commission. The Commission evaluates financial systems and tries to control any potential risk areas within the Authority. This uncertainty has caused financial implications in the way that the fraud risks sometimes need to be dealt with special budget allocation. The developments from 2004 till 2009 clearly show how the Service has benefitted from its adoption of various practices of financial management. As a non-profit organization, it is important to consider public accountability. The progarmmes as well as the achievements of the Service are made widespread through media. The review of the services & applications, each year is a useful means of evaluating the future economic needs of the organization. The role of the fire service in countering tragedies is explicit among the people. They highly regard the service’s ability to deal with individual emergencies as well as large-scale fires and major incidents. The Service scored maximum (4/4) in assessment, and its direction of travel was also strong, in the year 2007 by the Audit Commission, which is an independent body responsible for ensuring that public money is spent reasonably, resourcefully and effectively, to achieve high quality local services for the public. The Greater Manchester Fire and Rescue Authority, on the other hand, scored half (2/4) in assessment, and its direction of travel was reported as well, in the year 2007 by the Audit Commission. The reports show that the authority is improving gradually in controlling its finances, within the available resources. The service should take the responsibilities for public funds very sincerely and ensure that financial risks and implications are accurately measured and entirely considered before decision making. 6.5 Political: The Shropshire Fire Authority organises an appropriate hierarchical structure, to establish and maintain management and control of health and safety in the organization. The policies adopted are important to promote equity and diversity for effective participation of diversity of people. Commencing from the adoption of Integrated Risk Management Planning in 2004, the service has whole-heartedly encouraged the idea of all encompassing risk management process. The foundation of their policy is a full and comprehensive review of risk, within the county and the operation of risk reduction measures accordingly. Valuing the lives of people is their primary consideration, being stated as “putting Shropshire’s safety first”. Being affiliated with National Framework, it follows the legal requirements provided by it. Shropshire Fire and Rescue Service, despite being one of the smallest fire services in the UK, have proven to be a trendsetter. Over the years, it has improved the performance to maximize their goals. The Shropshire Fire and Rescue Service has made this possible, by carrying out a number of reviews, & implementing where necessary major changes to service provision. This measure has greatly reduced the risk faced by the communities they serve, hence helping the service to fulfil its main goal. The reviews effectively explore the opportunities for enhanced service delivery; better utilization of existing resources; and further identification of areas of improvement. The GMFRA has published a Medium Term Forecast for 2008/09 – 2010/11. This forecast defines the overall profile of the Authority’s budget by identifying the methods for allocation of available resources. This helps in meeting the corporate objectives and affords the framework for annual budgets. It also helped in meeting corporate priorities of the Authority and to diminish community risks identified in the Integrated Risk Management Plan (Financial Statements 2003/04). 6.6 Product life cycle: Shropshire and Wrekin Fire Authority aims to improve the capacity of its organization by applying such measures as; estimating the existing resources to meet demand, and hence maintain the best service in all conditions. The maintenance of fire fighting equipments is an important factor in facilitating the fire and rescue services. The equipments like aerial vehicles, large vans, and water piping systems are worth a lot of money and hence serious efforts should be made for maintaining them. The equipment maintenance and cleaning along with the RDS (Retain Duty System) Stations for admin, costed £76,000 during the term 2005-2008 (Shropshire and Wrekin Fire Authority, Strategy and Resources Committee report). 7. Conclusion The Shropshire Fire and Rescue Service is rightly proud of its achievements so far through employing and accommodating the best practice of financial management processes. The review being conducted makes the financial management of the service significantly obvious. They have been working to maximize the prevention from fire occurrences and occasions and hence complying with the notion, ‘prevention is better than cure’. Having considered the performance of the service, I conclude that Shropshire Fire and Rescue Authority has been able to show commendable progress, despite being one of the smallest fire services in the UK. In my opinion, the service is endeavouring to mitigate different risks and their financial implications and has operated with strong financial control. References Financial Performance to July 2009, including the Annual Treasury Report 2008/09. Report of the Chief Fire Officer http://www.shropshirefire.gov.uk/webimages/managing-the-service/cfa/strategyresources-meetings-data/pdf-272-2009-09-23-10-financial-performance.pdf [Accessed 22 December 2009] Greater Manchester Fire and Rescue Authority, 2004. Financial Statements 2003/04. http://www.manchesterfire.gov.uk/media/1aeb914f-9f38-4332-9fdd-eb4257d504c6-Statement of accounts2003-2004.pdf [Accessed 23 December 2009] Greater Manchester fire & rescue authority, joint meeting of policy finance and general purposes committees, 29 January 2009 http://www.manchesterfire.gov.uk/media/172263/item%209%20capital%20prog.pdf [Accessed 22 December 2009] Minutes of the Meeting of Shropshire and Wrekin Fire and Rescue Authority Strategy and Resources Committee held at Headquarters, Shrewsbury, on Thursday, 22 January 2009 http://www.shropshirefire.gov.uk/webimages/managing-the-service/cfa/fireauthority-meetings-data/pdf-503-2009-02-11-05-strategy-and-resources-minutes-22-january-2009.pdf [Accessed 22 December 2009] Shropshire and Wrekin Fire Authority 13 June 2007 Document tabled at Agenda Item 11 Statement of Accounts 2006/07 Minutes of A Joint Meeting of the Policy and Finance & General Purposes Committees, 29th January 2009. http://www.manchesterfire.gov.uk/media/174827/joint%20policy%20and%20finance%20minutes.pdf [Accessed 22 December 2009] Shropshire and Wrekin Fire Authority Strategy and Resources Committee 22 January 2009. Capital Programmes 2009/10 to 2013/14 and Prudential Guidelines Report of the Treasurer. http://www.shropshirefire.gov.uk/webimages/managing-the-service/cfa/strategyresources-meetings-data/pdf-235-2009-01-22-11-capital-programme-2009-10-to-2013-14-and-prudential-guidelines.pdf[Accessed 22 December 2009] Shropshire and Wrekin Fire and Rescue Authority, Strategy and Resources Committee 23 September 2009. Shropshire fire and rescue service. Safer communities core strategy, 2006-2009. http://www.shropshirefire.gov.uk/docs/policies-and-strategies/safer-communities/2006-09-safer-communities-core-strategy.pdf [Accessed 22 December 2009] Shropshire Fire and rescue service, Community safety road safety strategy 2006 to 2009, http://www.shropshirefire.gov.uk/docs/policies-and-strategies/safer-communities/2006-09-road-safety-strategy.pdf [Accessed 8 February 2009] Appendix-A Read More