Accounts

Statement of Comprehensive Net Expenditure

For the Year to 31 March 2022

Statement of Financial Position

As at 31 March 2022

Statement of Cash Flows

For the period ending 31 March 2022

Statement of Changes in Taxpayers’ Equity

For the period ending 31 March 2022

Notes to the Accounts

1. Statement of Accounting Policies and Accounting Convention

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and UK adopted international accounting standards.

The 2021/22 Government Financial Reporting Manual (FReM) applies International Financial Reporting Standards (IFRS), adapted or interpreted for the public sector. Where the FReM permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the particular circumstances of the UK Statistics Authority for the purpose of giving a true and fair view has been selected. The particular policies adopted by the Authority are described below. They have been applied consistently in dealing with items that are considered material to the accounts.

In addition to the primary statements prepared under IFRS, the FReM also requires the Authority to prepare two additional primary statements. The Statement of Outturn Against Parliamentary Supply and supporting notes show outturn against Estimate in terms of the net resource requirement and the Net Cash Requirement.

These accounts have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment and in-house software.

The Authority is primarily resourced by funds approved by the House of Commons through the annual Appropriation Act. Resources are drawn down each month to meet expenditure requirements and are credited to the General Fund. The functional currency for the UK Statistics Authority is pounds sterling; the Authority keeps a small balance of sterling and euros as well as shopping vouchers and postage stamps.

Going concern

The Authority anticipates continued funding to promote and safeguard the production of official statistics that serve the public good, as evidenced by the inclusion of financial provision for that service in the SR21 settlement agreement with HM Treasury. This is sufficient evidence that the Authority remains a going concern in accordance with the continuity of service principle outlined within the FReM.

Property, plant and equipment

Property, plant and equipment (PPE) assets include buildings, computers, and associated equipment, office machinery, and furniture and fittings.

Civil Estate property is occupied in Newport, Titchfield and Christchurch. Ownership of the land and buildings was transferred to the Government Property Agency on 30th September 2021 at current market value using professional valuations.

Expenditure on the short-term property lease at Drummond Gate is stated at current cost by using indices taken from the Authority’s publication “Price Index Numbers for Current Cost Accounting”.

All other PPE assets are re-valued from the beginning of the quarter of acquisition. These assets are stated at current costs by using indices taken from the Authority’s publication Price Index Numbers for Current Cost Accounting.

PPE assets must exceed the capitalisation threshold of £5,000 (excluding VAT) and have a life greater than one year.

Intangible assets

Intangible assets consist of software licenses and in-house developed software. Software licenses are not re-valued and are included at depreciated historical cost.

In-house developed software is stated at current costs by using indices developed by the Office for National Statistics (ONS) National Accounts Division.

In House Developed Software assets must exceed a capitalisation threshold of £50,000 (excluding VAT) and have a life greater than one year.

Software Licenses must exceed a capitalisation threshold of £5,000 (excluding VAT) and have a life greater than one year.

Statistical records

Statistical information has built up over many years and is stored for reference purposes. No attempt is made to value this data, as there is no realistic way of doing so that would arrive at a meaningful valuation. The cost of storing and maintaining the data is charged to the Statement of Comprehensive Net Expenditure as incurred.

Depreciation and amortisation

Depreciation is calculated so as to write off the re-valued cost of assets over the estimated useful economic life on a straight-line basis (except where otherwise indicated), as follows:

Assets in the course of construction

Assets under construction are capitalised as appropriate where meeting the requirements of IAS 16 or IAS 38 and transferred out of assets under construction into the relevant category of PPE or intangibles on completion.

Research and development

The Authority undertakes certain research into statistical and survey methodology. Costs are charged to the Statement of Comprehensive Net Expenditure as they arise.

As required under European System of Accounts (ESA) 10 Research and Development costs are charged to Capital within the Statement of Parliamentary Supply. The reconciliation between the Statement of Comprehensive Net Expenditure and the Statement of Parliamentary Supply is shown at SOPS Note 2.

Assets held for sale

Assets held for sale comprise properties, plant and equipment that are no longer in operational use and are available for immediate sale in their present condition and are being actively marketed. The assets are classified from non-current to current assets at sales prices less costs to sell. Assets held for sale are not depreciated.

Revenue from contracts with customers

Under IFRS 15, key judgements in determining the recognition and timing of
revenue recognition are identified at the point when:

• control of goods and services is transferred under contractual arrangements and services to the customer
• performance obligations are satisfied, whether at a point in time or over time

Most of the Authority’s performance obligations relate to services satisfied over time.

The Authority applies the five-stage model for the recognition of revenue from contracts with customers:

Step 1 – Identify the contract(s) with a customer.
Step 2 – Identify the performance obligations in the contract.
Step 3 – Determine the transaction price.
Step 4 – Allocate the transaction price to the performance obligations in
the contract.
Step 5 – Recognise revenue when the Authority satisfies a performance
obligation.

The application of the model depended on the facts and circumstances presented in a contract with a customer and requires the exercise of judgement. Revenue related to performance obligations recognised over time as the service is rendered is measured by reference to either input (resources consumed in satisfying a performance obligation) or output (measurements of value to the customer of services transferred) methods.

The Authority recognises revenue using an input method based on overheads
incurred. Revenue is calculated by reference to reliable estimates and total
expected costs. Revenue and associated margin are therefore recognised
progressively as costs are incurred. The Authority has determined this method faithfully depicts the Authority’s performance in transferring control of the services to the customer.

If the overtime criteria for revenue recognition are not met, revenue is
recognised at the point in time that control is transferred to the customer, when the Authority has right to payment on delivery.

Prices are calculated in accordance with Managing Public Money.

Foreign exchange

The Authority conducts a small number of transactions which are denominated in a foreign currency which are reviewed in accordance with IAS 21 and 39 (derivatives).

Transactions, other than Euros, are translated into sterling at the exchange rate ruling on the date of each transaction. Assets and liabilities denominated in Euros are translated into sterling at the exchange rate ruling at the date of the Statement of Financial Position.

Leases

Leases are reviewed in accordance with IAS 17. The total cost of operating leases is expensed in equal instalments over the life of the lease. Assets held under finance leases are capitalised as non-current assets at the inception of the lease, with a corresponding liability being recognised for the lower of the fair value of the leased asset and the present value of the minimum lease payments. Finance lease payments are apportioned between the reduction of the lease liability and finance charges in the Statement of Comprehensive Net Expenditure to achieve a constant rate of interest on the remaining balance of the liability. Assets held under finance leases are depreciated over the shorter of the estimated useful life of the asset and the lease term.

In March 2020 the UK Statistics Authority extended an agreement to lease a floor at Drummond Gate. The lease is for a period of five years with a break clause after 3 years. We do not consider the lease term to represent a major part of the remaining economic life of the building. In addition, the lease agreement does not include any terms which transfer substantially all the risks and rewards of ownership to the UK Statistics Authority. We have therefore classified the lease as an operating lease.

Following the transfer of freehold properties to the Government Property Agency, the Authority entered into 15-year lease agreements at sites occupied in Newport, Titchfield and Christchurch, commencing October 2021. The terms of these lease agreements do not include the substantial transfer of risks and rewards associated with the premises and the lease term is less than the remaining economic life of the freeholds. We have therefore recognised these leases as operational.

The Authority has also entered into an agreement to occupy premises in Edinburgh, with a lease period running for 25.5 years from October 2019. The terms of occupation do not include the substantial transfer of risks and rewards associated with the premises and the lease term is less than the remaining economic life of the building. We have therefore recognised this lease as operational.

Financial instruments

The Authority does not hold any complex financial instruments.

The only financial instruments included in the accounts are receivables and payables. Trade receivables are recognised at their amortised cost less expected credit losses in accordance with IFRS 9.

Provisions and early departure costs

The Authority provides for legal or constructive obligations which are of
uncertain timing or amount at the Statement of Financial Position date on the basis of best estimate of the expenditure required to settle the obligation.
Where the effect of time value is significant, provisions are discounted using the discount rates published by HM Treasury. These provisions are reviewed each year in accordance with IAS 37.

The Authority meets the responsibility of additional costs of employees who take voluntary early severance or who retire early by paying the amounts required over the period between early departure and normal retirement date. The Authority provides for this in full when the early retirement programme becomes binding.

The Authority recognises a liability for early departure costs where an obligation to pay employees exists.

The Authority recognises the obligation as a provision in the financial statements when:

• the scheme has been announced
• it has created a valid expectation that it will fulfil the obligations of the scheme

The Authority recognises the obligation as an accrued liability in the financial
statements when:

• a formal signed agreement with the member of staff is in place
• the member of staff has agreed a specified leaving date

In the circumstances where we have not met the criteria listed above the exit costs will be recognised in the following financial years.

Trade receivables

Trade receivables are recognised at their amortised cost less expected credit losses in accordance with IFRS 9. Expected credit losses are based on the Authority’s expectation of recovery at the year end.

Staff costs

Under IAS19 Employee Benefits, all staff costs must be recorded as an expense as soon as the organisation is obliged to pay them. This includes the cost of any untaken leave at the year end.

Cash and Cash Equivalents

The Authority holds balances of cash and cash equivalents in a readily realised form; these include cash balances, shopping vouchers and postage stamps.

VAT

Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT.

Programme Expenditure

Net expenditure for the year is analysed in the Statement of Comprehensive Net Expenditure between income and operating costs. The classification of expenditure and income as programme follows the definition of programme costs set out in HM Treasury Consolidated Budgeting Guidance, and as voted by Parliament in the Treasury’s Supply Estimate.

Pensions

Past and present employees are covered by the provisions of the Principal Civil Service Pension Schemes as described in notes to the accounts and in the Authority’s Remuneration Report. The Principal Civil Service Pension Scheme (PCSPS) and the Civil Servant and Other Pension Scheme (CSOPS) are unfunded, except in respect of death in service or ill health retirement. Employees can opt to open partnership pension accounts, a stakeholder pension with employer contributions ranging from 8% to 14.75 % depending on the Employee’s age.

The Authority recognises the expected costs of these elements on a systematic and rational basis over a period during which it benefits from employees’ services by payment to the Principal Civil Service Pension Schemes (PCSPS) of amounts calculated on an accruing basis. Liability for payment of future benefits is a charge on the PCSPS. In respect of the defined contribution elements of the schemes, the Authority recognises the contribution payable for the year.

Contingent liabilities

In addition to contingent liabilities disclosed in accordance with IAS 37, the Authority discloses for parliamentary reporting and accountability purposes certain statutory and non-statutory contingent liabilities where the likelihood of a transfer of economic benefit is remote, but which have been reported to
Parliament in accordance with the requirements of Managing Public Money.

Where the time value of money is material, contingent liabilities which are required to be disclosed under IAS 37 are stated at discounted amounts and the amount reported to Parliament separately noted. Contingent liabilities that are not required to be disclosed by IAS 37 are stated at the amounts reported to Parliament.

Accounting Estimates and Judgements

In preparation of the Authority’s financial statements, management has made estimates and judgements that impact the amounts being reported for assets and liabilities as at the date of the Statement of Financial Position and amounts reported against income and expenditure during the year. Uncertainties are inherent in business activities, and as such, some elements of financial statements cannot be measured precisely and therefore can only be estimated. Estimation involves judgements based on the latest available, reliable information.

Definitions

Estimate

A tentative evaluation and rough calculation, of value, quantity or size. These
would include:

• Depreciation
• Revaluations
• Provisions
• Accruals

Judgement

The capacity to assess situations or circumstances shrewdly and to draw sound conclusions. These would include:

• Revenue from contracts with customers
• Useful Economic Life and Impairment of In-house Software Intangible Assets Useful Economic Life

Revenue from contracts with customers

Judgements are applied to measurement and timing of revenue recognition and related balances for contract assets, trade receivables and accrued and deferred income in the context of satisfaction of performance obligations over time or at a point in time.

Depreciation

Revaluations

The Authority uses the indexation method (modified historic cost accounting) to adjust the value of its other tangible assets, namely Drummond Gate refurbishment costs, Office Machinery, Computer Hardware and Furniture and Fittings. Indexation is used to adjust the asset values to take into consideration market factors. This provides an estimate of their value based on judgements about the economy by the Office for National Statistics.

Increases in valuation are credited to the Revaluation Reserves. Negative revaluations, called impairments are in the first instance written off against previously upward revaluations taken to the revaluation reserves. Where no previous revaluation reserves exist the impairments are written off as an expense in the Statement of Comprehensive Net Expenditure.

The indexation method is an estimate as it deals with categories as a whole, without consideration for individual assets.

Intangible Assets Useful Economic Life

Applicable expenditure incurred in the development of internally created software is capitalised and recognised as an intangible asset if the criteria set out in the relevant accounting standards are met. The Authority has made judgements and assumptions when assessing whether a project meets these criteria and recognises an intangible asset, whether purchased or built in-house (at cost) if, and only if:

• the Authority intends to complete the asset and bring it into use
• the Authority has the ability to use the asset
• there are adequate technical, financial and other resources to complete the development and use the asset
• it is probable that the future economic benefits that are attributable to the asset will flow to the entity
• the cost of the asset can be measured reliably

Having recognised the costs and determined the economic life attributable to an intangible asset by applying IAS 38, the Authority undertakes an annual review of in-house developed software by applying IAS 36, adapted by HM Treasury for the public sector. The software does not generate future cash flows; its purpose is the support of future service potential and where an asset is not held for the purpose of generating cash flow, the value of the asset is assumed to equal the cost of replacing the asset, unless there has been a reduction in the service level. The Authority gauges the continued service potential of each in-house developed software asset by referring to the following factors:

• management information from the in-house software, including usage statistics where available
• future plans highlighted by the ONS Strategic Roadmap and the Digital, Technology and Methodology transformation plan
• information technology reviews
• business area expectations and intelligence of ongoing requirements
• the estimated remaining useful economic life of the asset

The remaining economic lives for intangible assets are estimated at between two and six years for internal projects.

A reduction in the value of in-house developed software or impairment of assets in the course of construction, resulting from decisions undertaken by the Authority in the course of normal business operations is charged to Departmental Expenditure Limit (DEL). Normal business operation covers all loss and damage to assets that result from management or staff action and the actions of third parties.

Provisions

IAS 37 defines and specifies the accounting for and disclosure of provisions, contingent liabilities, and contingent assets.

A provision is a liability of uncertain timing or amount. The liability may be a legal obligation or a constructive obligation. A constructive obligation arises from the Authority’s actions, through which it has indicated to others that it will accept certain responsibilities, and as a result has created an expectation that it will discharge those responsibilities.

The Authority recognises a provision if it is probable that an outflow of cash or other economic resources will be required to settle the provision. If an outflow is not probable, the item is treated as a contingent liability.

A provision is measured at the amount that the Authority would rationally pay to settle the obligation at the end of the reporting period. Risks and uncertainties are considered in measuring a provision which is discounted to its present value.

Provisions related to voluntary exits

Provisions for voluntary exits and related accruals, are recognised in line with the accounting policies.

Provision for Bad Debts

This is based on judgement of the expected credit losses. The value of the debt is maintained by invoice based on its age and efforts are made to recover the debts by contacting the customer. The judgement of expected credit losses is based on historical general recovery rates and any known information regarding specific debts. The recognition of expected credit losses will result in a bad debt being charged against the provision. This will increase the amount of expenditure to the Statement of Comprehensive Net Expenditure in year (an increased charge to provision for bad debt) and correspondingly reduce the level of Trade Receivables held within the Current Assets (within the Statement of Financial Position).

Provision for Potential Claims

The value for provisions for tribunals and personal injury claims are based on ongoing cases at the year end and their likelihood of an outcome, with the probabilities being derived from the judgement of legal expertise the authority has employed. For example, the value of a provision for an ongoing case has been calculated based on the overall claim multiplied by the probable outcome, if there is considerable doubt over the value and timing of the claim it should be treated as a contingent liability and as such not disclosed in the financial statements. All provisions are reviewed each year in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The key principle established by IAS 37 is a provision should be recognised only when there is a present obligation resulting from past events. Planned future expenditure cannot be recognised.

Provision for Unredeemed Survey Incentive Vouchers

The Authority issues shopping vouchers to survey respondents as an incentive to complete certain surveys and is billed for the cost of these vouchers once the voucher has been redeemed by the recipient. Vouchers issued to survey respondents have a three-month expiry date so an estimated judgement is made, based on redeemed rates during the year, of the probable value of unredeemed vouchers at year end that will be redeemed before expiring. As the expenditure relates to the past event of issuing the vouchers and the cash outflow is not certain, the estimated value of vouchers redeemed before expiring are accounted for as a provision.

Estates Dilapidations

The terms of any lease that the Authority has entered into states that the building should be returned in a fit state to the landlord. At any such time the Authority should consider whether there is any liability to return the property to its original state and commence discussion with the landlord. Negotiations with the landlord will precede any such provision for dilapidations and be based on the estimated cost of returning the property back to its original state.

The accounting treatment for Potential Claims and Dilapidations is to charge the costs to the Statement of Net Comprehensive Expenditure in the accounting period they arise, along with increasing the provision balances held on the Statement of Financial Position. When an actual payment is made relating to these specific entries, the actual payment is made against the provision with no charge to the Statement of Net Comprehensive Expenditure.

Discounting of long term provisions

Where the effect of time value is significant, provisions are discounted at the following rates:

Accruals

Accruals are an accounting methodology that records income and expenditure when they occur; ensuring costs are recorded in the same period as the activity regardless of when cash is exchanged. The term accrual refers to any individual entry recording income and expense in the absence of a cash transaction.

These occur throughout the year to ensure monthly reporting is as complete as possible, but its primary purpose is to ensure the Annual Accounts represent a true and fair view of the Authority’s financial position.

When goods or services are received prior to the financial year end but the invoice is not expected until the following financial year, an accrual is made to ensure that the charge is recognised in the correct accounting period. Other goods and services will require a quote previously provided such as a capital item to be delivered or calculation, such as a timesheet multiplied by the hourly rate for an employment agency accrual.

Holiday and flexi leave pre-payments and accruals are calculated by comparing the expected year-end balance against the actual balance at 31 March. The expected balance is calculated by spreading the entitlement evenly over the year taking into consideration the leave year start date for each member of staff. This is compared to the actual balance held; the balance is valued by grade using staff planning rates.

The Authority is currently compliant in meeting its reporting requirements relating to estimates and judgements and where these estimates change, they are amended within the guidelines of accounting standard IAS 8.

Standards Not Yet Adopted

IFRS 16

IFRS 16 provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases with the exception of short-term and low value leases. Assets and liabilities will be recognised on a ‘right to use’ basis, and are identified by being explicitly specified in a contract, or implicitly specified at the time it is made available for use by the Authority.

Due to the COVID-19 pandemic and resulting resource pressure being experienced by departments, the Financial Reporting Advisory Board (FRAB) and HM Treasury agreed that the mandatory effective date for IFRS 16 in central government was to be deferred from 1 April 2021 to 1 April 2022.

The Authority will adopt the IFRS 16 Lease Standard from 2022/23 in line with the mandatory effective date of 1 April 2022. The Authority anticipates the deferral and future implementation of the standard will impact on the Statement of Financial Position, primarily due to the transfer of its freehold assets to the Government Property Agency (page 139). The transfer and subsequent lease back of the assets will require a lease liability and recognition of right of use assets (an estimated £44.1m asset and liability before discounting in relation to the three freehold assets transferred). All other current lease commitments, for which IFRS 16 will apply, will amount to an estimated £0.8m right of use asset and liability before discounting is applied.

IFRS 16 liabilities will be measured using the single HM Treasury nominal discount rate for leases, the rate for the full calendar year 2022 is 0.95%. From the 1 April 2022, the Authority will recognise total IFRS 16 right of use assets and liabilities at a present value of £42.2m.

2. Segmental Information of Expenditure and Income

The following information is regularly provided in order to inform the decision making by the National Statistician’s Executive Group and the primary Chief Operating Decision Maker (CODM) of the UK Statistics Authority to make decisions regarding planning, resource allocation and income, as well as performance monitoring.

Census related expenditure and income reported in the Segmental Information Table

Reconciliation between segment information and net operating cost in the statement of comprehensive net expenditure.

3. Staff Numbers and related Costs

For the period ending 31 March 2022

Staff numbers

Capitalised staff costs

4. Programme costs

5. Income

For the period ending 31 March 2022

An analysis of income from services provided external and public sector customers is as follows:

6. Property, plant and equipment

For the period ending 31 March 2022

Transfer of Authority’s Freehold Property to GPA

In August 2020, departments received instructions from the Chief Secretary to the Treasury to transfer ownership of their freehold properties to the Government Property Agency (GPA). The Authority completed the transfer of its three freehold properties and associated revaluation reserve to GPA on 30 September 2021 and subsequently leased those properties back from 1 October 2021.

The freehold assets listed above, were subject to a professional valuation by
Montagu Evans prior to the transfer date of 30 September 2021. Movements in net book value as a result of this revaluation were adjusted prior to the transfer to the GPA and charged to the Authority’s revaluation reserve.

Montagu Evans valued the Authority’s freehold properties at £30.2m, which compared with a net book value of assets being transferred of £35.4m. The difference of £5.2m was charged to the revaluation reserve prior to transfer.

The freehold assets were transferred to the GPA at nil consideration and in accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance, resulting in a capital grant in kind expense in the Statement of Comprehensive Net Expenditure and a PPE disposal of the same amount.

7. Intangible Fixed Assets

Intangible Fixed Assets – In-house developed software applications

For the period ending 31 March 2022

Intangible Fixed Assets

For the period ending 31 March 2022

In-house developed software applications – Assets Under Construction

8. Financial Instruments

For the period ending 31 March 2022

As the cash requirements of the Authority are met through the Estimates process, financial instruments play a more limited role in creating and managing risk than would apply to a non-Public Sector body of a similar size. The majority of financial instruments relate to contracts for non-financial items in line with the Authority’s expected purchase and usage requirements. The Authority is, therefore, exposed to little credit, liquidity or market risk. The Authority revalues outstanding Euro transactions at year end.

Currency risk

9. Trade Receivables and Other Assets

as at 31 March 2022

Total Trade Receivables Outstanding

10. Cash and Cash Equivalents

For the period ending 31 March 2022

11. Trade Payables and Other Current Liabilities

For the period ending 31 March 2022

12. Provisions for Liabilities and Charges

For the period ending 31 March 2022

Analysis of expected timing of discounted flows

13. Capital Commitments

For the period ending 31 March 2022

14. Commitments Under Leases

For the period ending 31 March 2022

Operating Leases

The total future minimum Lease payments under Operating Leases are detailed in the table below for each of the following periods.

Finance Leases

One Finance Lease was entered into during 2020/21, the leased asset is included under Property, Plant & Equipment. The obligations under Finance Leases as at 31 March 2022 are as shown in the table above.

15. Other Financial Commitments

For the period ending 31 March 2022

The Authority entered into non-cancellable contracts (which are not Leases or PFI contracts) for Information Management Services, Statistical Services and Facilities Management. As a result the Authority is committed to the following payments.

16. Contingent Liabilities

For the period ending 31 March 2022

None.

17. Related Party Transactions

For the period ending 31 March 2022

The Authority has had various material transactions with other Government Departments and other Central Government bodies.

The table below shows all Government Department and other Central Government bodies with whom we had total transactions in excess of £1m during the year. The figures below are net of VAT.

18. Events Arising after the Reporting Date

None.

19. Date of Authorisation of the Accounts

The Accounts were authorised for issue on the date of the Comptroller and Auditor General’s certification.