Fire Rescue Servise: Financial Management Report

Introduction

I am going to review the financial statements for (your fire authority) and Greater Manchester Fire Authority and prepare a report for you, my senior manager.

I have done this by critically assessing the operational boundary and the authorized limit proposals for the Fire and Rescue Services, calculating the safety margin of the Operational Boundary to the Authorised Limit, and identifying six categories of risk facing the FRS. For each category, I have commented on whether the risk has a financial impact on the FRS and if so, whether it has been recognized in the financial statements. At the conclusion I give my opinion as to whether it has been recognized, explaining why I believe that is the correct view.

Findings

Section 3

1. Identify characteristics of your FRS – rural, urban, mixed – state what they are and compare to GMFRS as part one in a section of the assignment. 100 words

My FSR will provide its service in a mixed environment, i.e., covering both the rural and urban areas. E unique characteristics of this FSR will include: establishing the customer needs, delivery of superior services, efficiency, reviewing of the processes & procedures, and carrying out a follow-up to the customer service delivery. The GMFRS operations mostly cover the urban areas while the rural is not their priority, my FSR will provide services to both the urban and the rural setup. The fire rescue services provided by the GMFRS are geared towards the management review while my FRS will provide the services as per the customer needs. There will be superior service delivery that will include the provision of first aid to the fire victims and training the customers in simple safety fire rescue operations. The GMFRS does not review its fire equipment and some faulty alarms were noticed, my FSR will continuously undertake the review process of equipment state then carry out the effectiveness of the services provided to the customers.

2. State six risk areas and expand on the relevance of the risks to your FRS.

The six risk areas of my FRS are; technological changes, credit risk, legislation risks, environmental risks, pensions risk, and commercial relationships risk.

Technological changes risk

The provision of fire services in this company will be technologically compliant. To use fire extinguishing methods that do not affect the environment. In an attempt to reduce the cases of fire, a hotline that is accessible by all the customers will be installed at all the terminals; along the roads, in the houses and offices which would help the customers to alert the company conveniently. In contrary to services offered by GMFRS, where some of their equipment is not in good condition, this FRS will continuously upgrade and make repairs where needed. Clients’ proposals on how to improve the provision of services will be received through the internet. This will help the company to process its contributions electronically.

Credit risk

This is the risk of losing an investment due to the unworthiness of the debtors or failure to pay back what is due. The company, organization, or investors has to look for an alternative opportunity for investment in order to evade this kind of risk. The proposed company will take a number of courses of action to reduce such risks.

The proposed FRS will invest in other activities to generate additional income that can help meet its financial obligations. The staffing will be reduced to the lowest levels. This will reduce the cost of operations to the organization. While other fire fighting companies carry their employment with a view of creating job opportunities for the citizens since it is a state-owned corporation, the proposed FRS will employ the number of works that increase efficiency and productivity. This will help the company to save some of the profits generated from these activities. The funds that are to lend to individuals who are not creditworthy will therefore be reduced (Atrill).

Legislation risks

Since the establishment of FRS is regulated by the government legislations, the proposed FRS will operate within the established legislations to avoid any activities that are against the law. In Arnold’s view; the new legislation requiring the protection of the environment will be our priority. We will use fire equipment that does not pollute the environment. The use of carbon to extinguish fire will be reviewed. While new technologies within the legislation will be used. The use gargets installed and the building materials that are fireproof will be used in the coverage area to reduce the occurrence of fire outbreaks. The area of operations is not limited hence the proposed company will operate in a mixed environment (204).

Environmental risks

The FRS’ uses gases to extinguish fire; this should be in compliance with the environment protection Act. The Act has a laid down restriction as to the percentage of gas that can be emitted into the environment. The noise made by alarm sirens will be regulated as per the Noise Act. They will have indicators rather than the normal high loud sirens. The public will be sensitized to their presence and usage. The proposed FRS will be going green as required by the global environmental forum requirement on the protection of the environment.

Pension’s risk

There are heavy fines imposed on individual employers who do not subscribe or make the pension plan for their employees. The GMFRS has a pension payment deficit to its employees, which the proposed company will calculate based on the percentage of the employee’s earnings. To avoid these, a well-planned pensions plan for all the employees in the company will be put in place. There will be both planned and unplanned benefits. It will be at the disposal of the employees to take one that suits their needs.

Commercial relationships risk

The relationship between the suppliers and government authority if o guarded can bring negative progress in the company. The other fire-fighting companies got into a mess when the suppliers supplied them with low-quality products that had defaulted. These gadgets could not work well for the purpose intended.

1. Consider whether your FRS has accommodated the high-risk areas in its accounts.

The proposed FRS has ensured that all the high-risk areas are well provided for in its accounts for protecting the rural and urban against fire destruction. The FRS has used the modern risk assessment technique in the identification of the severity that can result from the fire outbreak. These areas were identified through the following procedure:-

The establishment of the fire hazards was the initial stage in the identification of the high-risk areas. An investigation into the possible ways of fire risk was carried out. The possible sources of ignition to covered areas were established. The ignition sources in all these areas were analyzed. The most featuring and dangerous source of ignition was established to be from the fuel.

In establishing the severity of the loss that could result from these fire risk areas, people’s homes and property worth at risk were identified. Those areas with highly inflammable materials and possible ignition sources around their places were established. Fire risk control gargets were installed in all these areas.

The cost of reducing such risk was carried out. Possible gargets and devices to be installed were identified for fire protection. These included signs and notices for fire-prone areas, emergency escape routes, detection devices, and maintenance costs that were approximated and found to be within the company’s budget.

After all the analysis was carried the following areas were identified and covered by the FRS.

The urban area where there is a high risk of fire break out is our priority. The industrial areas are well covered in our master. The highest budget allocation has been given to this area. A part of the total budget of 2.6 million has been allocated to buy fire fighting gadgets for the urban areas. The private homes in the urban area will receive 30% of this allocation. The other 1.6 million will be used to sensitize the public on the best first aid and fire proactive control formula. This money will ensure that fire breakouts are reduced to very low levels and those who might have got injuries receive better first aid early enough to save their lives.

Guthrie explains that; Pensions have been a core problem with GMFRS, the company will submit the employee’s pensions at every end of the financial period as required by the law. When employees do not receive their dues or are not certain about their future benefits, they become demoralized and they do not perform. To improve these standards in performance, a well-planned benefit for pensions has been put in place. The employees will be motivated and the anticipated result will be very high. This has been some of the risky parts of service delivery in other fire-fighting companies where the benefits are not paid well to the retired employees. The company has allocated the sum of 2.6 million for the purpose of catering for its employees. This amount will be deducted from the employees’ monthly salary as a percentage of the total earnings received (602).

To fight and control fire effectively, a modern fire fighting machine has been bought. This machine will help carry the fire fighting crew, the gadgets for fire fighting, and the doctors who can give first aid to the fire victims.

This modern machine is used to fight fire with different techniques; it contains gas, aluminum, water, and also powder. The machine can move at a considerable speed; this will reduce the time taken in between the distance of places to rescue the fire-prone areas. There will also be no additional vehicle to carry other tools like the ladder as all these are carried in the vehicle. There are three such vehicles in the urban center, the older machines are still in use despite the advancement in technology. There is also a budget proposal for the purchase of new vehicles in the following financial year. A total of 32 million pounds have been projected to be used in acquiring additional vehicles to cope up with the new technological advancement.

The currency risk that leads to companies losing millions of Euros every year in their financial accounts has been completely avoided. The company is operating only in the mother country and therefore, there will be no currency exchange risk. The payment is automated and the deductions are made on property rates paid by the individuals to the government; this has minimized the defaulters’ chances of not submitting their rates. The collection has been protected as the money does not pass through many hands. The cases of pilferages are minimized. The company is striving to make more profits but ensuring that the services are to the best standards for the clients. The strict rules of collections are not to deprive society of services but to enhance the delivery of service. Fire fighting is like the provision of a public good; therefore the contribution must just be public. More still when private property is saved, then there is an additional fee charged.

Wachowicz et.al in their book explains “the rural that has been forgotten while there is also many risks of fire break out, the company has allocated the sum of over 5.2 million Euros to re- infrastructure the fire fighting mechanisms. The construction of fire stations and equipping them to the heist levels of standards has been carried out. The local communities are also given the best skills on how to reduce and fight the outbreak of fire. The company has by now constructed over 50 fire stations in rural areas. The same number is expected to increase within the two years of operations. The company is working with other stakeholders in the building industry to ensure that sub stand buildings that are not fireproof are eliminated. The materials used in the local areas will be scrutinized and only be used for the intended purpose if they are proved to be fireproof. This will depend on the kind of the building and its purpose: the property to be stored in it (608).

Section 2

• For 31.3.2008
  • NB 🙁 The recommended safety margin is 5%)
  • For GMFRS = £11.698M = Operational Boundary
  • For GMFRS Authorised limit = £12.5M
  • So proportion of authorised limit used = operational boundary/authorised limit
  • = 11.698/12.5 = 0.935
  • Therefore the safety margin = 100% – 93.5% = 6.5%

Therefore, FRS operates within recommended safety margins

• For 31.03.2009
  • For GMFRS = £10.526M = Operational Boundary
  • For GMFRS Authorised limit = £14.25M
  • So the proportion of authorized limit used = operational boundary/authorized limit = 10.526/14.25 = 0.7386
  • Therefore the safety margin = 100% – 73.86% = 26.14%

The recommended safety margin is 5%

Therefore FRS operates above recommended safety margins

• For 31.12.2010

For GMFRS = £14.252M = Operational Boundary

For GMFRS Authorised limit = £13.25M

So proportion of authorised limit used = operational boundary/authorised limit = 14.252/13.25 = 1.0755

Therefore the safety margin = 100% – 107.55% = -7.55%

The recommended safety margin is 5%

Therefore FRS operates below the recommended safety margins

Section 1

1. State how the operational boundary and authorized limits are set.

Russell admits that; Operation boundary indicates the scope of the direct and indirect emanation in the operation boundaries of an organization. To establish an operational boundary, the organization first defines its organizational boundary. This will help the organization in reporting the degree of its gas emissions to the environment. These should be reported to the authority in time before the operations of the company start (346).

The operation boundary for this FRS will be subjected to legal requirements. The management will be controlled by the head office while the branches will coordinate the operations in the branches. All the financial allocation will be done by the company’s budget control committee and the monitoring will be carried out by the outsourced company to allow for transparency. The company will provide fire services to both the local and urban centers in the country. These centers will coordinate their daily operations and the sensitization of the areas of their jurisdictions.

2. Then explain the main considerations of your FRS. Comment whether your FRS has recognized and accommodated the considerations you had identified.

There are situations when some players in the industry might fail to comply to meet their contractual obligations. The FRS has fully taken this into consideration, and shall fully ensure that the terms of the contract are respected and understood by everyone, the suppliers, employees, investors, and the customers. In order not to face serious rejection of putting up the company at the outlined location, the FRS has talked with the local leaders and has fully engaged the people on the ground of the importance of building up the company at the prescribed location, this is a measure towards ensuring that there shall be no opposing people during the building up of the company.

There shall be the use of modern fire engines. A modern fire engine is a multipurpose vehicle that carries professionals and equipment for a wide range of fire fighting and rescue tasks. This would be unlike the GMFRS which does not have modern fire engines. This FRS shall work in close consultation with other emergency response agencies, for instance, the police departments, the local and state authorities. There shall be the provision of emergency medical services as the first aid to the fire victims. All the fire fighting skills would be widely taught to everybody in the country, the firefighters themselves as well as the people in offices or the families at home. This will highly help them know what to do in the event of a fire breakout. The employees would be required to have skills at hand, ranging from size-up, and extinguishing, ventilation, salvage, overhaul, search and rescue. There shall be clear governance in the FRS, this would be achieved through clear roles and responsibilities of the players (employees, management, and customers), real enforcement of role definitions, and synchronizing contractual obligation to different stakeholders, the building of consumer trust, employee loyalty and keeping of their data, there shall be a quality of service by providing all year-round services.

Conclusion and Recommendation

The company is operating well; it needs some adjustment in the income-generating operations to boost its financial base. The management needs to be decentralized in order to ease the branches’ operations and decongest the procedure of attending to the pressing needs of the clients.

Works Cited

Arnold, Glen. Corporate financial management. London: Financial Times Prentice Hall, 2008.

Atrill, Peter. Financial Management for Decision Makers. University of Essex: FT Prentice Hall, 2008.

Guthrie, James. International public financial management reform: progress, contradictions, and challenges. University of Sydney: IAP, 2005.

Russell, Peter and Ian, Dewing. The Role of Principles and Practices of Financial Management in the Governance of With-Profits UK Life Insurers. Oxford: Butterworth-Heinemann, 2009.

Wachowicz, et.al. Fundamentals of financial management. London: Financial Times/Prentice Hall, 2008.