SFPA - Annual Report and Accounts 1998-1999

notes to the accounts for the year ended 31 march 1999

1. Statement of accounting policies

The financial statements have been prepared in accordance with the Resource Accounting Manual issued by HM Treasury. The particular accounting policies adopted by the Agency are described below.

1.1 Accounting convention

These accounts have been prepared under the historical cost convention modified to account for the revaluation of fixed assets, and stocks where material, at their value to the business by reference to their current costs.

1.2 Restatement of comparative figures

Prior period adjustments have been made to reflect a change in accounting for stock and notional insurance. In addition, the General Fund has been increased to reflect a transfer from the revaluation reserve. See notes 3.4, 6, 10 and 11.

1.3 Tangible fixed assets

Title to the land and buildings shown in the accounts is held by the Agency in the name of the Secretary of State for Scotland.

Land and buildings have been restated at current cost using professional valuations every five years and appropriate indices in intervening years. Other tangible assets have been stated at current cost using appropriate indices. The minimum level for capitalisation of a tangible fixed asset is £1,000.

1.4 Depreciation

Depreciation is provided at rates calculated to write off the valuation of buildings and other tangible fixed assets by equal instalments over their estimated useful lives. Land is not depreciated. Lives are as follows:

1.5 Stocks

Engineering spares are supplied with fishery protection vessels and have been capitalised as part of the original purchase price. Spare parts and other stock items purchased subsequently are valued at the lower of cost and net realisable value.

1.6 Income

The Agency is not a trading organisation. Income comprises primarily the sale of obsolete equipment and the provision of information to private companies.

1.7 Capital charge

A charge, reflecting the cost of capital utilised by the Agency is included in the expenditure costs. The charge is calculated at the government's standard rate of 6% in real terms on all assets less liabilities, except for donated assets, where the charge is nil.

1.8 Foreign exchange

Transactions which are denominated in a foreign currency are translated into sterling at the exchange rate ruling on the date of each transaction, except where rates do not fluctuate significantly, in which case an average rate for a period is used.

1.9 Pensions

Present and past employees are covered by the provisions of the Principal Civil Service Pension Scheme (PCSPS) which is non-contributory and unfunded. Although the Scheme is a defined benefit scheme, liability for payment of future benefits is a charge to the PCSPS. Departments, agencies and other bodies covered by the PCSPS meet the cost of pension cover provided for the staff they employ by payment of charges calculated on an accruing basis. There is a separate scheme statement for the PCSPS as a whole.

1.10 Early departure costs

The Agency is required to meet the additional cost of benefits beyond the normal PCSPS benefits in respect of employees who retire early. The Agency provides in full for this cost when the early retirement programme has been announced and is binding on the Agency. The Agency may, in certain circumstances, settle some or all of its liability in advance by making a payment to the Paymaster General's account at the Bank of England for the credit of the Civil Superannuation Vote. The amount provided is shown net of any such payments.

1.11 Taxation

As an on-vote agency of a government department, the Agency is not liable to pay Corporation Tax. The Agency is not separately registered for Value Added Tax (VAT) as VAT is accounted for centrally by The Scottish Office. Any irrecoverable input VAT is included in the cost of the related expenditure or asset.