5. Notes to the Accounts

1.Statement of Accounting Policies and Accounting Convention

The 2020/21 financial statements are prepared in accordance with the 2020/21 Government Financial Reporting Manual (FReM) issued by HM Treasury.

The accounting policies contained in the FReM apply 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 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 inclusion of financial provision for that service in the Core Table (page 71) and the 2021/22 UK Statistics Authority Main Estimate, a statutory instrument laid before Parliament. This is sufficient evidence that the Authority remains a going concern.

Property, plant and equipment

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

Civil Estate property is occupied in Newport, Titchfield and Christchurch. The land and buildings are stated at current market value using professional valuations on an annual basis. The annual professional valuation more fully reflects specific local market conditions.

The properties occupied at Titchfield, Christchurch and Newport were professionally valued as at 31 March 2021 by District Valuer Services (DVS) as the specialist property arm of the Valuation Office Agency. The valuations were prepared in accordance with the appropriate sections of the Practice Statements (PS) and the United Kingdom Practice Statements (UKPS) contained within the Royal Institution of Chartered Surveyors (RICS) Appraisal and Valuation Standards.

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 (including VAT) and have a life greater than one year.

Intangible assets

Intangible assets consist of software licences 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 (including VAT) and have a life greater than one year.

Software Licences must exceed a capitalisation threshold of £5,000 (including 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:

Table 48

For property, plant and equipment a full year’s depreciation is charged in the year of acquisition with the exception of building refurbishments where depreciation is charged from the quarter in which the assets are completed.

In-house developed software and applications are amortised between a range of two and six years, (subject to an annual review), charged from the quarter in which the assets are completed.

Perpetual software licences are amortised on a straight line basis over a life of four years. Where software licences are over a specific period they are depreciated over this useful life.

Each group of assets is reviewed annually for impairment.

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 recognized 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 January 2018 the UK Statistics Authority entered into an agreement to lease Drummond Gate. The lease is for a period of five years with a break clause after three 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.

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

4. Programme costs

For the period ending 31 March 2021

Table 49

5. Income

For the period ending 31 Mar 2021

Table 51

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

Table 52

6. Property, plant and equipment

For the period ending 31 March 2021

Table 53

7. Intangible fixed assets

For the period ending 31 March 2021

Table 54

For the period ending 31 March 2020

Table 55

Intangible fixed assets

For the period ending 31 March 2021

In-house developed software applications – assets under construction

Table 56

8. Financial instruments

For the period ending 31 March 2021

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

Table 57

9. Trade receivables and other assets

as at 31 March 2021

Table 58

Total trade receivables outstanding

Table 59

10. Cash and cash equivalents

For the period ending 31 March 2021

Table 60

11. Trade payables and other current liabilities

For the period ending 31 March 2021

Table 61

12. Provisions for liabilities and charges

For the period ending 31 March 2021

Table 62

Analysis of expected timing of discounted flows

Table 63

13. Capital commitments

For the period ending 31 March 2021

Table 64

14. Commitments under leases

For the period ending 31 March 2021

Operating leases

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

Table 65

Finance leases

One Finance Lease was entered into during 2020/21, the leased asset is included under Property, Plant and Equipment. The obligations under Finance Leases as at 31 March 2021 are as shown in the table below.

Table 66

15. Other financial commitments

For the period ending 31 March 2021

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.

Table 67

16. Contingent liabilities

For the period ending 31 March 2021

None.

17. Related party transactions

For the period ending 31 March 2021

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 £1million during the year. The figures below are net of VAT.

Table 68

18. Events arising after the reporting date

19. Date of authorisation of the accounts

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